Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2009-10-13 Revision-Date: 2010-11-23 Number: 09-088/4 Author-Name: Joern H. Block Author-Workplace-Name: Erasmus University Rotterdam, Technische Universitaet Muenchen Author-Name: Lennart Hoogerheide Author-Workplace-Name: Erasmus University Rotterdam Author-Name: Roy Thurik Author-Workplace-Name: Erasmus University Rotterdam, EIM Business and Policy Research, Zoetermeer, Max Planck Institute of Economics, Jena Title: Education and Entrepreneurial Choice: An Instrumental Variables Analysis 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. Classification-JEL: C35, I20, J24, L26 Keywords: Occupational choice, entrepreneurial choice, education, self-employment, endogeneity, instrumental variables File-Url: http://papers.tinbergen.nl/09088.pdf File-Format: application/pdf File-Size: 209206 bytes Handle: RePEc:tin:wpaper:20090088