Risk, Balanced Skills and Entrepreneurship
University of Amsterdam - Amsterdam School of Economics (ASE); Amsterdam Center for Entrepreneurship
Simon C. Parker
University of Western Ontario; Durham University - Department of Economics and Finance; Institute for the Study of Labor (IZA)
Mirjam Van Praag
University of Amsterdam - Department of Economics; Tinbergen Institute; Institute for the Study of Labor (IZA); Tinbergen Institute; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics
November 29, 2011
This paper proposes that risk aversion encourages individuals to invest in balanced skill profiles, making them more likely to become entrepreneurs. By not having taken this possible linkage into account, previous research has underestimated the impacts both of risk aversion and balanced skills on the likelihood individuals choose entrepreneurship. Data on Dutch university graduates provides evidence which supports this contention. It thereby raises the possibility that even risk-averse people might be suited to entrepreneurship; and it may also help explain why prior research has generated mixed evidence about the effects of risk aversion on selection into entrepreneurship.
Number of Pages in PDF File: 25
Keywords: entrepreneurship, jack-of-all-trades, risk, human capital, occupational choice
JEL Classification: D81, J24, L26, M13working papers series
Date posted: November 30, 2011
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