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Identifying the effect of college education on business and employment survival

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  • Andrea Asoni

    (Charles River Associates
    IFN – Research Institute for Industrial Economics)

  • Tino Sanandaji

    (Institute for Economic and Business History Research (EHFF))

Abstract

We use a multipronged identification strategy to estimate the effect of college education on business and employment survival. We account for the endogeneity of both education and business ownership with a competing risks duration model augmented with a college selection equation. We estimate the model jointly on the self-employed and salaried employees in the National Longitudinal Survey of Youth 1979. Unlike most previous studies, we find that college does not increase business survival. By contrast, a college degree significantly increases employment survival. Cognitive skills have a positive impact on survival for both the self-employed and employees. These findings suggest that college benefits the self-employed less than salaried, perhaps by generating skills more useful in employment than self-employment, or because of differences in the value of signaling.

Suggested Citation

  • Andrea Asoni & Tino Sanandaji, 2016. "Identifying the effect of college education on business and employment survival," Small Business Economics, Springer, vol. 46(2), pages 311-324, February.
    • Handle: RePEc:kap:sbusec:v:46:y:2016:i:2:d:10.1007_s11187-015-9686-5
    DOI: 10.1007/s11187-015-9686-5
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    More about this item

    Keywords

    Business survival; Employment survival; College education; Cognitive skills; Locus of control;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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