Entrepreneurial School Dropouts: A Model on Signalling, Education and Entrepreneurship
I present a theory on the relationship between educational choice and entrepreneurship in a labour market with asymmetric information. The model shows that, in a labour market where education is used as a signalling device, an imperfect relationship between productivity in education and in the labour market can lead to an equilibrium where a fraction of the high-ability individuals choose to quit school and become entrepreneurs. Using a comprehensive set of Norwegian register data, I find that this is prediction is confirmed empirically: Individuals combining low education with high ability have the highest entrepreneurship rates in the population.
|Date of creation:||02 Apr 2012|
|Contact details of provider:|| Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway|
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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References listed on IDEAS
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- Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2010.
"Small Family, Smart Family? Family Size and the IQ Scores of Young Men,"
Journal of Human Resources,
University of Wisconsin Press, vol. 45(1).
- Black, Sandra & Devereux, Paul J. & Salvanes, Kjell G, 2007. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," CEPR Discussion Papers 6443, C.E.P.R. Discussion Papers.
- Black, Sandra E. & Devereux, Paul J. & Salvanes, Kjell G., 2007. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," IZA Discussion Papers 3011, Institute for the Study of Labor (IZA).
- Paul J. Devereux & Sandra E. Black & Kjell G. Salvanes, 2007. "Small family, smart family? Family size and the IQ scores of young men," Open Access publications 10197/739, School of Economics, University College Dublin.
- Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2007. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," NBER Working Papers 13336, National Bureau of Economic Research, Inc.
- Headen, Alvin E, Jr, 1990. "Wage, Returns to Ownership, and Fee Responses to Physician Supply," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 30-37, February.
- In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 179-221.
- In-Koo Cho & David M. Kreps, 1997. "Signaling Games and Stable Equilibria," Levine's Working Paper Archive 896, David K. Levine.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
- Tamas Bartus, 2004. "MARGEFF: Stata module to compute average marginal effects for categorical and limited dependent variable models," Statistical Software Components S445001, Boston College Department of Economics, revised 04 Sep 2009.
- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
- Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June. Full references (including those not matched with items on IDEAS)
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