IDEAS home Printed from https://ideas.repec.org/a/kap/sbusec/v44y2015i4p783-796.html
   My bibliography  Save this article

Education and entrepreneurial success

Author

Listed:
  • Ivar Kolstad
  • Arne Wiig

Abstract

This paper estimates the effect of education on the success of entrepreneurial activity, using survey data from Malawi. An instrument variable approach is used to address the endogeneity of education. We find a significant and substantial effect of an added year of primary education on entrepreneurial profitability. This is consistent with theoretical arguments that primary schooling provides a generalised form of competence that underpins the variety of skills an entrepreneur needs to succeed in business. Results are robust to non-random selection into entrepreneurship. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Ivar Kolstad & Arne Wiig, 2015. "Education and entrepreneurial success," Small Business Economics, Springer, vol. 44(4), pages 783-796, April.
    • Handle: RePEc:kap:sbusec:v:44:y:2015:i:4:p:783-796
    DOI: 10.1007/s11187-014-9621-1
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11187-014-9621-1
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11187-014-9621-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mahdi Barouni & Stijn Broecke, 2014. "The Returns to Education in Africa: Some New Estimates," Journal of Development Studies, Taylor & Francis Journals, vol. 50(12), pages 1593-1613, December.
    2. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    3. Edward P. Lazear, 2004. "Balanced Skills and Entrepreneurship," American Economic Review, American Economic Association, vol. 94(2), pages 208-211, May.
    4. Belzil, Christian, 2007. "The return to schooling in structural dynamic models: a survey," European Economic Review, Elsevier, vol. 51(5), pages 1059-1105, July.
    5. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, May.
    6. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," The World Bank Research Observer, World Bank, vol. 29(1), pages 48-82.
    7. International Monetary Fund, 2007. "Malawi: Poverty Reduction Strategy Paper: Growth and Development Strategy," IMF Staff Country Reports 2007/055, International Monetary Fund.
    8. Richard Record, 2007. "From policy to practice: changing government attitudes towards the private sector in Malawi," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(6), pages 805-816.
    9. repec:adr:anecst:y:2008:i:91-92:p:12 is not listed on IDEAS
    10. Matt Dickson, 2013. "The Causal Effect of Education on Wages Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(4), pages 477-498, August.
    11. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    12. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    13. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    14. Le Wang, 2013. "How Does Education Affect the Earnings Distribution in Urban China?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(3), pages 435-454, June.
    15. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
    16. Andrews,Donald W. K. & Stock,James H. (ed.), 2005. "Identification and Inference for Econometric Models," Cambridge Books, Cambridge University Press, number 9780521844413, January.
    17. Kolstad, Ivar & Wiig, Arne & Moazzem, Khondaker Golam, 2014. "Returns to education among entrepreneurs in Bangladesh," Journal of Asian Economics, Elsevier, vol. 34(C), pages 54-65.
    18. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    19. Justin Van Der Sluis & Mirjam Van Praag & Wim Vijverberg, 2008. "Education And Entrepreneurship Selection And Performance: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 795-841, December.
    20. Måns Söderbom & Francis Teal & Anthony Wambugu & Godius Kahyarara, 2006. "The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(3), pages 261-288, June.
    21. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2005. "Entrepreneurship Selection and Performance: A Meta-Analysis of the Impact of Education in Developing Economies," The World Bank Economic Review, World Bank, vol. 19(2), pages 225-261.
    22. van der Sluis, Justin & van Praag, Mirjam C. & van Witteloostuijn, Arjen, 2007. "Why Are the Returns to Education Higher for Entrepreneurs than for Employees?," IZA Discussion Papers 3058, Institute of Labor Economics (IZA).
    23. Lang, Kevin, 1993. "Ability Bias, Discount Rate Bias and the Return to Education," MPRA Paper 24651, University Library of Munich, Germany.
    24. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, April.
    25. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 281-281.
    26. Robert Moffitt, 2008. "Estimating Marginal Treatment Effects in Heterogeneous Populations," Annals of Economics and Statistics, GENES, issue 91-92, pages 239-261.
    27. Orr, Alastair, 2000. "'Green Gold'?: Burley Tobacco, Smallholder Agriculture, and Poverty Alleviation in Malawi," World Development, Elsevier, vol. 28(2), pages 347-363, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kolstad, Ivar & Wiig, Arne & Moazzem, Khondaker Golam, 2014. "Returns to education among entrepreneurs in Bangladesh," Journal of Asian Economics, Elsevier, vol. 34(C), pages 54-65.
    2. Iversen Jens & Malchow-Møller Nikolaj & Sørensen Anders, 2011. "The Returns to Education in Entrepreneurship: Heterogeneity and Non-Linearities," Entrepreneurship Research Journal, De Gruyter, vol. 1(3), pages 1-38, July.
    3. Hu, Feng, 2015. "Return to Education for China’s Return Migrant Entrepreneurs," World Development, Elsevier, vol. 72(C), pages 296-307.
    4. Balestra, Simone & Backes-Gellner, Uschi, 2017. "Heterogeneous returns to education over the wage distribution: Who profits the most?," Labour Economics, Elsevier, vol. 44(C), pages 89-105.
    5. Serneels, Pieter & Beegle, Kathleen & Dillon, Andrew, 2017. "Do returns to education depend on how and whom you ask?," Economics of Education Review, Elsevier, vol. 60(C), pages 5-19.
    6. Jesus Crespo Cuaresma & Anna Raggl, 2016. "The dynamics of returns to education in Uganda: National and subnational trends," Development Policy Review, Overseas Development Institute, vol. 34(3), pages 385-422, May.
    7. Matt Dickson, 2013. "The Causal Effect of Education on Wages Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(4), pages 477-498, August.
    8. Muhammad Nauman Malik & Masood Sarwar Awan, 2016. "Analysing Econometric Bias and Non-linearity in Returns to Education of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 837-851.
    9. Fossen, Frank M. & Büttner, Tobias J.M., 2013. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Economics of Education Review, Elsevier, vol. 37(C), pages 66-84.
    10. Kentaro Shimada & Zeba Khan & Suguru Mizunoya & Ayako Wakano, 2016. "An Update of the Returns to Education in Kenya: Accounting both endogeneity and sample selection biases," Discussion Papers in Economics and Business 16-18, Osaka University, Graduate School of Economics.
    11. Arabsheibani, Reza & Staneva, Anita, 2012. "Returns to Education in Russia: Where There Is Risky Sexual Behaviour There Is Also an Instrument," IZA Discussion Papers 6726, Institute of Labor Economics (IZA).
    12. Kumara, Ajantha Sisira, 2015. "Wage Differentials in Sri Lanka: The case of a post-conflict country with a free education policy," MPRA Paper 68068, University Library of Munich, Germany, revised 25 Nov 2015.
    13. Hans Dietrich & Harald Pfeifer & Felix Wenzelmann, 2016. "The more they spend, the more I earn? Firms' training investments and post-training wages of apprentices," Economics of Education Working Paper Series 0116, University of Zurich, Department of Business Administration (IBW).
    14. Mahfuza Khatun, 2015. "Experience, Education, and Entrepreneurial Success: A View from Bangladesh," Journal of Social and Development Sciences, AMH International, vol. 6(4), pages 71-81.
    15. Oancea, Bogdan & Pospisil, Richard & Dragoescu, Raluca, 2017. "The return to higher education: evidence from Romania," MPRA Paper 81720, University Library of Munich, Germany.
    16. Nikolov, Plamen & Jimi, Nusrat & Chang, Jerray, 2020. "The Importance of Cognitive Domains and the Returns to Schooling in South Africa: Evidence from Two Labor Surveys," Labour Economics, Elsevier, vol. 65(C).
    17. Belzil, Christian, 2007. "The return to schooling in structural dynamic models: a survey," European Economic Review, Elsevier, vol. 51(5), pages 1059-1105, July.
    18. Ben-Halima, B. & Chusseau, N. & Hellier, J., 2014. "Skill premia and intergenerational education mobility: The French case," Economics of Education Review, Elsevier, vol. 39(C), pages 50-64.
    19. Jens Iversen & Nikolaj Malchow-Møller & Anders Sørensen, 2016. "Success in entrepreneurship: a complementarity between schooling and wage-work experience," Small Business Economics, Springer, vol. 47(2), pages 437-460, August.
    20. Serge Atherwood & Corey S Sparks, 2019. "Early-career trajectories of young workers in the U.S. in the context of the 2008–09 recession: The effect of labor market entry timing," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-30, March.

    More about this item

    Keywords

    Entrepreneurship; Returns to schooling; Endogeneity; Malawi; L26; J24; C30;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:44:y:2015:i:4:p:783-796. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.