Education and Entrepreneurial Choice: An Instrumental Variables Analysis

Joern Block, Lennart Hoogerheide and Roy Thurik
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Lennart Hoogerheide: Erasmus University Rotterdam

No 09-088/4, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper resulted in a publication in the 'International Small Business Journal' , 2013, 31(1), 23-33.

Education is argued to be an important driver of the decision to start a business. The measurement of its influence, however, is difficult since it is considered to be an endogenous variable. This study accounts for this endogeneity by using an instrumental variables approachand a data set of more than ten thousand individuals from 27 European countries and the US. Theeffect of education on the decision to become self-employed is found to be strongly positive,much higher than the estimated effect in case no instrumental variables are used. That is, thehigher the respondent's level of education, the greater the likelihood that he/she starts a business.Implications for entrepreneurship research and practice are discussed.

Keywords: Occupational choice; entrepreneurial choice; education; self-employment; endogeneity; instrumental variables (search for similar items in EconPapers)
JEL-codes: C35 I20 J24 L26 (search for similar items in EconPapers)
Date: 2009-10-13, Revised 2010-11-23
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20090088

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