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The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees

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Listed author(s):
  • Fossen, Frank M.
  • Büttner, Tobias J. M.

Abstract

We assess the relevance of formal education for the productivity of the self-employed and distinguish between opportunity entrepreneurs, who voluntarily pursue a business opportunity, and necessity entrepreneurs, who lack alternative employment options. We expect differences in the returns to education between these groups because of different levels of control. We use the German Socio-economic Panel and account for the endogeneity of education and non-random selection. The results indicate that the returns to a year of education for opportunity entrepreneurs are 3.5 percentage points higher than the paid employees' rate of 8.1%, but 6.5 percentage points lower for necessity entrepreneurs.

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Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2012/19.

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Date of creation: 2012
Handle: RePEc:zbw:fubsbe:201219
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Keywords: returns to education; opportunity; necessity; entrepreneurship;

Other versions of this item:

Find related papers by JEL classification:
  • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
  • I20 - Health, Education, and Welfare - - Education - - - General
  • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The value of education to different types of people
    by Nicholas Gruen in Club Troppo on 2012-09-13 07:48:46
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Cited by:

  1. Peter Zwan & Roy Thurik & Ingrid Verheul & Jolanda Hessels, 2016. "Factors influencing the entrepreneurial engagement of opportunity and necessity entrepreneurs," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 273-295, December.
  2. Arnab Bhattacharjee & Jean Bonnet & Nicolas Le Pape & Régis Renault, 2016. "Going into Business and Out of Business: The Role of Human Capital," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2016-04, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  3. Andrea Asoni & Tino Sanandaji, 2016. "Identifying the effect of college education on business and employment survival," Small Business Economics, Springer, vol. 46(2), pages 311-324, February.
  4. Guido Buenstorf & Kristian Nielsen & Bram Timmermans, 2017. "Steve Jobs or No Jobs? Entrepreneurial activity and performance among Danish college dropouts and graduates," Small Business Economics, Springer, vol. 48(1), pages 179-197, January.
  5. Roberts Joseph & Hoy Frank & Katz Jerome A. & Neck Heidi, 2014. "The Challenges of Infusing Entrepreneurship within Non-Business Disciplines and Measuring Outcomes," Entrepreneurship Research Journal, De Gruyter, vol. 4(1), pages 1-12, January.
  6. Hu, Feng, 2015. "Return to Education for China’s Return Migrant Entrepreneurs," World Development, Elsevier, vol. 72(C), pages 296-307.
  7. Pamela Lenton, 2017. "Being your own boss: the many faces of self-employment," Working Papers 2017003, The University of Sheffield, Department of Economics.

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