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Does College Education Reduce Small Business Failure?

Author

Listed:
  • Asoni, Andrea

    (Charles River Associates)

  • Sanandaji, Tino

    (Research Institute of Industrial Economics (IFN))

Abstract

We estimate the effect of college education on business survival using the NLSY79. The endogeneity of both education and business ownership is accounted for by a competing risks duration model augmented with a college selection equation. Contrary to the previous literature, we fi…nd no effect of college education on business failure. College however signi…cantly increases “employment survival.” Unlike college, cognitive skills have a positive impact on employment survival for both the self-employed and employees. The results suggest that college affects the self-employed and salaried employees in different ways, for example generating skills more useful in employment than self-employment.

Suggested Citation

  • Asoni, Andrea & Sanandaji, Tino, 2014. "Does College Education Reduce Small Business Failure?," Working Paper Series 1050, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1050
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    References listed on IDEAS

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    More about this item

    Keywords

    Selection; Entrepreneurship; College Education; Intelligence; Self-con…dence;
    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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