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Entrepreneurship, human capital, and labor demand: A story of signaling and matching

Elisabeth Bublitz (), Kristian Nielsen, Florian Noseleit () and Bram Timmermans

No 166, HWWI Research Papers from Hamburg Institute of International Economics (HWWI)

Abstract: Contrary to employees, there is no clear evidence that entrepreneurs' education positively effects income. In this study we propose that entrepreneurs can benefit from their education as a signal during the recruitment process of employees. This process is then assumed to follow a matching of equals among equals. Using rich data from Germany and Denmark we fully confirm a matching on qualification levels for high-skilled employees, partially for medium-skilled employees but not for low-skilled employees, suggesting that as skill levels of employees decrease it becomes equally probable that they work for different founders. Founder qualification is the most reliable predictor of recruitment choices over time. Our findings are robust to numerous control variables as well as across industries and firm age.

Keywords: returns to education; labor demand of small firms; human capital; matching; signaling (search for similar items in EconPapers)
JEL-codes: J21 J23 J24 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cse, nep-ent, nep-ger, nep-hrm, nep-lma and nep-sbm
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Related works:
Journal Article: Entrepreneurship, human capital, and labor demand: a story of signaling and matching (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hwwirp:166

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