The higher returns to formal education for entrepreneurs versus employees

Mirjam Praag, Arjen van Witteloostuijn and Justin van der Sluis

Small Business Economics, 2013, vol. 40, issue 2, 375-396

Abstract: How valuable is formal education for entrepreneurs’ income relative to employees’? And if the income returns to formal education are different for entrepreneurs vis-à-vis employees, what might be a plausible explanation? To explore these questions, we analyze a large representative US panel. We show that entrepreneurs have higher returns to formal education than employees. We refer to this as the entrepreneurship returns puzzle. We run post hoc analyses to explore a number of potential explanations of this puzzle. Indirectly, our analysis indicates that the higher returns to formal education for entrepreneurs might be due to the fewer organizational constraints they face, leading to more personal control over how to use their human capital, compared to employees. Copyright Springer Science+Business Media, LLC. 2013

Keywords: Entrepreneurship; Self-employment; Education; Locus of control; Human capital; Wages; Incomes; J23; J24; J31; J44; M13; L26 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (60)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11187-012-9443-y (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:40:y:2013:i:2:p:375-396

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2

DOI: 10.1007/s11187-012-9443-y

Access Statistics for this article

Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch

More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().