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Education and Entrepreneurial Choice: An Instrumental Variables Analysis

Author

Listed:
  • Joern H. Block

    (Erasmus University Rotterdam, Technische Universitaet Muenchen)

  • Lennart Hoogerheide

    (Erasmus University Rotterdam)

  • Roy Thurik

    (Erasmus University Rotterdam, EIM Business and Policy Research, Zoetermeer, Max Planck Institute of Economics, Jena)

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.

Suggested Citation

  • Joern H. Block & Lennart Hoogerheide & Roy Thurik, 2009. "Education and Entrepreneurial Choice: An Instrumental Variables Analysis," Tinbergen Institute Discussion Papers 09-088/4, Tinbergen Institute, revised 23 Nov 2010.
    • Handle: RePEc:tin:wpaper:20090088
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    References listed on IDEAS

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    More about this item

    Keywords

    Occupational choice; entrepreneurial choice; education; self-employment; endogeneity; instrumental variables;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • I20 - Health, Education, and Welfare - - Education - - - General
    • 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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