Identifying the effect of college education on business and employment survival

Andrea Asoni () and Tino Sanandaji

Small Business Economics, 2016, vol. 46, issue 2, 324 pages

Abstract: We use a multipronged identification strategy to estimate the effect of college education on business and employment survival. We account for the endogeneity of both education and business ownership with a competing risks duration model augmented with a college selection equation. We estimate the model jointly on the self-employed and salaried employees in the National Longitudinal Survey of Youth 1979. Unlike most previous studies, we find that college does not increase business survival. By contrast, a college degree significantly increases employment survival. Cognitive skills have a positive impact on survival for both the self-employed and employees. These findings suggest that college benefits the self-employed less than salaried, perhaps by generating skills more useful in employment than self-employment, or because of differences in the value of signaling. Copyright Springer Science+Business Media New York 2016

Keywords: Business survival; Employment survival; College education; Cognitive skills; Locus of control; C41; J24; L26 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s11187-015-9686-5

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