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Going into Business and Out of Business: The Role of Human Capital

Arnab Bhattacharjee (), Jean Bonnet (), Nicolas Le Pape () and Régis Renault
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Régis Renault: Université de Cergy-Pontoise, THEMA

Economics Working Paper Archive (University of Rennes 1 & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS

Abstract: An evaluation of the impact of an entrepreneur's human capital on her/his entrepre-neurial ability is likely to suffer from a sample selection bias if performed on a sample of new entrepreneurs alone. Our theoretical model of entrepreneurial choice allows us to characterize this bias. It is shown to be positive (respectively negative) for individuals who were in a favorable (respectively adverse) situation in the labor market at the time at which they decided to become self-employed. Our empirical application measures the impact of the entrepreneur's education on the newly created firm's survival. It is found to be strong and significant for individuals who were previously employed in the new firm's branch of activity, whereas it is at best weakly significant for individuals who were previously unemployed or employed in a branch different from that of the new firm, so that they are more likely to have been poorly matched. These results suggest a very substantial sample selection bias in our sample.

Keywords: entrepreneurial ability; labor market; human capital; ?rm survival (search for similar items in EconPapers)
JEL-codes: C41 J24 L26 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-ent, nep-hrm, nep-ino and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:tut:cremwp:2016-04

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