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The Returns to Education in Entrepreneurship: Heterogeneity and Non-Linearities

Author

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  • Iversen Jens

    (University of Southern Denmark)

  • Malchow-Møller Nikolaj

    (University of Southern Denmark)

  • Sørensen Anders

    (Copenhagen Business School)

Abstract

The returns to education in self-employment are addressed in four different specifications of the relationship between log income and years of schooling. The specifications range from a standard Mincer equation with a constant percentage increase in income for an additional year of schooling to the most flexible specification with dummy variables for different combinations of years of schooling and fields of study. Based on the more flexible specifications, important non-linearities and heterogeneity in the returns to education in self-employment are found. These results are robust across different estimation methods: OLS, Heckit correction models handling sample selection, and IV dealing with the potential endogeneity of years of schooling. Moreover, the results are robust to the use of different sample years, different definitions of self-employment, and different income measures for the self-employed.

Suggested Citation

  • Iversen Jens & Malchow-Møller Nikolaj & Sørensen Anders, 2011. "The Returns to Education in Entrepreneurship: Heterogeneity and Non-Linearities," Entrepreneurship Research Journal, De Gruyter, vol. 1(3), pages 1-38, July.
    • Handle: RePEc:bpj:erjour:v:1:y:2011:i:3:n:5
    DOI: 10.2202/2157-5665.1001
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    3. Mirjam Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2013. "The higher returns to formal education for entrepreneurs versus employees," Small Business Economics, Springer, vol. 40(2), pages 375-396, February.
    4. Bairagya, Indrajit & Bhattacharya, Tulika & Bhattacharjee, Manojit, 2020. "Impact of Credit Accessibility on the Earnings of Self-employed Businesses in India," Journal of Asian Economics, Elsevier, vol. 69(C).

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