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Entrepreneurship, human capital, and labor demand: A story of signaling and matching

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  • Bublitz, Elisabeth
  • Nielsen, Kristian
  • Noseleit, Florian
  • Timmermans, Bram

Abstract

Contrary to employees, there is no clear evidence that entrepreneurs' education positively effects income. In this study we propose that entrepreneurs can benefit from their education as a signal during the recruitment process of employees. This process is then assumed to follow a matching of equals among equals. Using rich data from Germany and Denmark we fully confirm a matching on qualification levels for high-skilled employees, partially for medium-skilled employees but not for low-skilled employees, suggesting that as skill levels of employees decrease it becomes equally probable that they work for different founders. Founder qualification is the most reliable predictor of recruitment choices over time. Our findings are robust to numerous control variables as well as across industries and firm age.

Suggested Citation

  • Bublitz, Elisabeth & Nielsen, Kristian & Noseleit, Florian & Timmermans, Bram, 2015. "Entrepreneurship, human capital, and labor demand: A story of signaling and matching," HWWI Research Papers 166, Hamburg Institute of International Economics (HWWI).
  • Handle: RePEc:zbw:hwwirp:166
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    Cited by:

    1. Dorner, Matthias & Fryges, Helmut & Schopen, Kathrin, 2017. "Wages in high-tech start-ups – Do academic spin-offs pay a wage premium?," Research Policy, Elsevier, vol. 46(1), pages 1-18.
    2. Krieger, Alexander & Block, Joern & Stuetzer, Michael, 2018. "Skill variety in entrepreneurship: A literature review and research directions," MPRA Paper 88389, University Library of Munich, Germany.
    3. Bellmann, Lisa & Brixy, Udo, 2018. "Hiring by start-ups and regional labor supply," IAB Discussion Paper 201818, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Knutsson, Polina, 2018. "Sorting on Unobserved Skills into New Firms," Working Papers 2018:38, Lund University, Department of Economics.
    5. Alex Coad & Kristian Nielsen & Bram Timmermans, 2017. "My first employee: an empirical investigation," Small Business Economics, Springer, vol. 48(1), pages 25-45, January.
    6. Kun Fu & Anne-Sophie Larsson & Karl Wennberg, 2018. "Habitual entrepreneurs in the making: how labour market rigidity and employment affects entrepreneurial re-entry," Small Business Economics, Springer, vol. 51(2), pages 465-482, August.

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    More about this item

    Keywords

    returns to education; labor demand of small firms; human capital; matching; signaling;
    All these keywords.

    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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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