Entrepreneurship and genetics: New Evidence

This paper seeks to better understand the differences in entrepreneurship rates across administrative regions and countries. Using several measures of entrepeneurship, as well as regional and panel data of countries, it finds that lactase persistence has a significant impact on entrepreneurship. Moreover, it shows that cross-country level variation in the frequency of lactase persistence found in the human body more than 500 years ago explains these observed differences across countries and regions today. Specifically, it finds that a one standard deviation increase in lactase persistence decreases regional self-employment by 7%. In addition, the estimates show that a one standard deviation increase in lactase persistence decreases total early-stage entrepreneurial activity (TEA) and established business ownership (EBO) by 4% and 1.58%, respectively. These findings remain robust to the introduction of the econometric method to deal with the mismeasurement of our historical variable, lactase persistence, as well as the introduction of several types of control variables such as per-capita GDP growth, education, culture, population density, urbanization, genetic diversity, institutions, geography, disease and banking structure.