Human Capital, Entrepreneurial Entry and Survival

Using British Household Panel Survey data from 1991 to 2008, we examine the interactions between self-employment and several variables, in particular education, age, health, marital status and children. We also consider gender variations. We found that higher education increases the likelihood of self employment and earnings from self employment for female entrepreneurs regardless of their employment status the previous year. For male entrepreneurs who were also entrepreneurs the previous year, higher levels of education reduce the hours worked in self-employment and the likelihood of them stay self employed. However, higher levels of education increase their monthly profit from self-employment. This is due to both higher productivity from their superior human capital and also the self-selection arising from the higher financial incentives they require to be self-employed.