Education and Entrepreneurial Choice: An Instrumental Variables Analysis
October 2009
Research Paper
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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 is the first to account for this endogeneity by using an instrumental variables approach. The effect 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, the higher the respondent's level of education, the greater the likelihood that he or she starts a business. Implications for method and practice are discussed.
Keywords
- entrepreneurship
- instrumental variables
- education
- endogeneity
- entrepreneurial choice
- occupational choice
- self-employment
Classifications using
Journal of Economic Literature (JEL) Classification System
- L26 : Entrepreneurship
- C35 : Discrete Regression and Qualitative Choice Models; Discrete Regressors
- J24 : Human Capital; Skills; Occupational Choice; Labor Productivity
- I20 : Education and Research Institutions: General
Automatically Extracted Terms
- education
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- rotterdam
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