Entrepreneurship

Edward P. Lazear ()
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Edward P. Lazear: Stanford University and IZA Bonn

No 760, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: The theory proposed below is that entrepreneurs are jacks-of-all-trades who may not excel in any one skill, but are competent in many. A coherent model of the choice to become an entrepreneur is presented. The primary implication is that individuals with balanced skills are more likely than others to become entrepreneurs. The model provides implications for the proportion of entrepreneurs by occupation, by income and yields a number of predictions for the distribution of income by entrepreneurial status. Using a data set of Stanford alumni, the predictions are tested and found to hold. In particular, by far the most important determinant of entrepreneurship is having background in a large number of different roles. Further, income distribution predictions, e.g., that there are a disproportionate number of entrepreneurs in the upper tail of the distribution, are borne out.

Keywords: entrepreneurship; occupation choice; diversity; jack-of-all-trades (search for similar items in EconPapers)
JEL-codes: J4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-hpe, nep-ind, nep-lab and nep-ltv
Date: Written
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Related works:
Working Paper: Entrepreneurship (2002)
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