Who becomes an entrepreneur? The role of ability, education, and sector choice
Montserrat Vilalta-Bufi (),
Aleksander Kucel () and
Additional contact information
Aleksander Kucel: ESCSET, Universitat Pompeu Fabra
Giovanni Giusti: ESCSET, Universitat Pompeu Fabra
No 2018/381, UB Economics Working Papers from Universitat de Barcelona, Facultat d'Economia i Empresa, UB School of Economics
The classical occupational choice model does not explain the simultaneous existence of low and high ability entrepreneurs. In this paper, we study the decision to become an entrepreneur when individuals choose their education level and the economic sector where to operate. We distinguish two sectors: the knowledge and the traditional sector. The knowledge sector requires individuals to invest in education. Under this framework, two results are possible: one where only high ability individuals become entrepreneurs, and one with the coexistence of low and high ability entrepreneurs. This framework provides a rational explanation of the relationship between ability, education, and self-employment. Using PIAAC data, we test the empirical implications of the model. We find that most countries have an equilibrium with low and high ability entrepreneurs.
Keywords: Entrepreneurship; human capital entry barrier; occupational choice model; ability; sector choice. (search for similar items in EconPapers)
JEL-codes: J21 J24 L26 (search for similar items in EconPapers)
Pages: 73 pages
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ewp:wpaper:381web
Access Statistics for this paper
More papers in UB Economics Working Papers from Universitat de Barcelona, Facultat d'Economia i Empresa, UB School of Economics Av. Diagonal 690, 08034 Barcelona. Contact information at EDIRC.
Bibliographic data for series maintained by UB School of Economics ().