Imperfect Transmission of Tacit Knowledge and Other Barriers to Entrepreneurship
University of Helsinki - Department of Economics; Helsinki Center of Economic Research (HECER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
University of Helsinki - Department of Political and Economic Studies; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
IZA Discussion Paper No. 2859
CESifo Working Paper No. 2053
This paper identifies several distortions which create barriers to entrepreneurship. First, in addition to the innate entry cost, there are entry costs caused by regulation. Second, union wage policies raise the opportunity cost of entrepreneurship. Third, inefficiencies in the transmission of tacit knowledge between generations of entrepreneurs can arise: with access to within-family ownership transfer, the outside market for entrepreneurship operates as a lemon's market. This problem becomes relevant when the economic life of a business idea exceeds the active life of an entrepreneur.
Number of Pages in PDF File: 24
Keywords: barriers to entrepreneurship, tacit knowledge, occupational choice
JEL Classification: J24, H25working papers series
Date posted: July 18, 2007
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