The Right Stuff? Personality and Entrepreneurship
Barton Hamilton (),
Nicholas W. Papageorge and
No 25006, NBER Working Papers from National Bureau of Economic Research, Inc
We construct a structural model of entry into self-employment to evaluate the impact of policies supporting entrepreneurship. Previous work has recognized that workers may opt for self-employment due to the non-pecuniary benefits of running a business and not necessarily because they are good at it. Other literature has examined how socio-emotional skills, such as personality traits, affect selection into self-employment. We link these two lines of inquiry. The model we estimate captures three factors that affect selection into self-employment: credit constraints, relative earnings and preferences. We incorporate personality traits by allowing them to affect sector-specific earnings as well as preferences. The estimated model reveals that the personality traits that make entrepreneurship profitable are not always the same traits driving people to open a business. This has important consequences for entrepreneurship policies. For example, subsidies for small businesses do not attract talented-but-reluctant entrepreneurs, but instead attract individuals with personality traits associated with strong preferences for running a business and low-quality business ideas.
JEL-codes: J23 J24 J31 J32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-hrm, nep-lma and nep-sbm
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Published as Barton H. Hamilton & Nicholas W. Papageorge & Nidhi Pande, 2019. "The right stuff? Personality and entrepreneurship," Quantitative Economics, vol 10(2), pages 643-691.
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