Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2004-09-23 Revision-Date: 2005-03-07 Number: 04-106/3 Author-Name: Simon Parker Author-Email: email@example.com Author-Workplace-Name: Durham University Author-Name: Mirjam van Praag Author-Email: firstname.lastname@example.org Author-Workplace-Name: Universiteit van Amsterdam, SCHOLAR Title: Schooling, Capital Constraints and Entrepreneurial Performance Abstract: We estimate the impact of schooling and capital constraints at the time of startup on the performance of Dutch entrepreneurial ventures, taking into account the potential endogeneity and interdependence of these variables. Instrumental variable estimates indicate that a 1 percentage point relaxation of capital constraints increases entrepreneurs' gross business incomes by 3.9% on average. Education enhances entrepreneurs' performance both directly—with a rate of return of 13.7%—and indirectly, because each extra year of schooling decreases capital constraints by 1.18 percentage points. The indirect effect of education on entrepreneurs' performance is estimated to be 3.0–4.6%.
This discussion paper has resulted in a publication in the Journal of Business and Economic Statistics, 24(4), 416-31. Classification-JEL: J23; J24; J31; M13 Keywords: entrepreneurship; self-employment; returns to education; capital constraint; liquidity constraint; borrowing constraint File-Url: http://papers.tinbergen.nl/04106.pdf File-Format: application/pdf File-Size: 412145 bytes Handle: RePEc:tin:wpaper:20040106