Education and Entrepreneurial Choice: An Instrumental Variables Analysis

Joern H. Block (), Lennart Hoogerheide () and Roy Thurik ()
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Lennart Hoogerheide: Erasmus University Rotterdam

No 09-088/4, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Education is argued to be an important driver of the decision to start a business. The measurement of its influence, however, is difficult since it is considered to be an endogenous variable. This study is the first to account for this endogeneity by using an instrumental variables approach. The effect of education on the decision to become self-employed is found to be strongly positive, much higher than the estimated effect in case no instrumental variables are used. That is, the higher the respondent's level of education, the greater the likelihood that he or she starts a business. Implications for method and practice are discussed.

Keywords: Occupational choice; entrepreneurial choice; education; self-employment; endogeneity; instrumental variables; entrepreneurship (search for similar items in EconPapers)
JEL-codes: C35 I20 J24 L26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu, nep-ent, nep-hrm, nep-lab and nep-sbm
Date: 2009-10-13

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Persistent link: http://EconPapers.repec.org/RePEc:dgr:uvatin:20090088

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