Financial Capital, Human Capital, and the Transition to Self-Employment:Evidence from Intergenerational Links

Thomas Dunn and Douglas Holtz-Eakin

No 5622, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The environment for business creation is central to economic policy, as entrepreneurs are believed to be forces of innovation, employment and economic dynamism. We use data from the National Longitudinal Surveys (NLS) to investigate the relative importance of financial and human capital exploiting the variation provided by intergenerational links. Specifically, we estimate the impacts of parental wealth and human capital on the probability that an individual will make the transition from a wage and salary job to self-employment. We find that young men's own financial assets exert a statistically significant, but quantitatively modest effect on the transition to self-employment. In contrast, the capital of parents exerts a large influence. Parents' strongest effect runs not through financial means, but rather through human capital, i.e., the intergenerational correlation in self-employment. This link is even stronger along gender lines.

JEL-codes: J23 M13 (search for similar items in EconPapers)
Date: 1996-06
Note: LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (154)

Published as Journal of Labor Economics, vol. 18, no.2, (April, 2000), pp. 287-305.

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