Does Education Enhance Entrepreneurship?

Kunwon Ahn () and John Winters
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Kunwon Ahn: Korea Labor Institute

No 14655, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Formal education is correlated with entrepreneurial activity and success, but correlation does not indicate causation. Education and entrepreneurship are both influenced by other related factors. The current study estimates causal effects of formal education on entrepreneurship outcomes by instrumenting for an individual's years of schooling using cohort mean years of maternal schooling observed decades prior. We differentiate self-employment by industry employment growth and firm incorporation status. We have multiple important results. Formal schooling significantly increases the probability of self-employment in high-growth industries for both women and men. Education reduces the probability of male self-employment in shrinking industries. Education also increases incorporated self-employment for women and men and reduces unincorporated self-employment among men but not women. The overall probability of self-employment increases with education for women but is unaffected by education for men. The results suggest that formal education enhances entrepreneurship.

Keywords: entrepreneurship; self-employment; education; human capital (search for similar items in EconPapers)
JEL-codes: I20 J24 L26 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2021-08
New Economics Papers: this item is included in nep-cwa, nep-ent, nep-isf, nep-lma and nep-sbm
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Citations: View citations in EconPapers (1)

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Journal Article: Does education enhance entrepreneurship? (2023)
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