Education and Entrepreneurial Choice: An Instrumental Variables Analysis

International Small Business Journal, Vol. 31(1), pp. 23-33, 2013

15 Pages Posted: 14 Oct 2009 Last revised: 20 Apr 2013

See all articles by Jorn H. Block

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Lennart F. Hoogerheide

VU University Amsterdam

Roy Thurik

Montpellier Business School; Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC); Erasmus Research Institute of Management (ERIM); EIM Netherlands - Business and Policy Research; Tinbergen Institute

Date Written: November 1, 2010

Abstract

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 approach and a data set of more than ten thousand individuals from 27 European countries and the US. The effect 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, the higher the respondent’s level of education, the greater the likelihood that he/she starts a business. Implications for entrepreneurship research and practice are discussed.

Keywords: Occupational choice, entrepreneurial choice, education, self-employment, endogeneity, instrumental variables, entrepreneurship

JEL Classification: C35, I20, J24, L26

Suggested Citation

Block, Jorn Hendrich and Hoogerheide, Lennart F. and Thurik, Roy, Education and Entrepreneurial Choice: An Instrumental Variables Analysis (November 1, 2010). International Small Business Journal, Vol. 31(1), pp. 23-33, 2013, Available at SSRN: https://ssrn.com/abstract=1488025

Jorn Hendrich Block (Contact Author)

University of Trier - Faculty of Management ( email )

D-54296
Germany

Erasmus University Rotterdam (EUR) - Institute of Management (ERIM) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Lennart F. Hoogerheide

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Roy Thurik

Montpellier Business School

France

Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC) ( email )

3000 DR Rotterdam
Netherlands
+31 10 408 2232 (Phone)
+31 10 408 9146 (Fax)

HOME PAGE: http://www.thurik.com

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

EIM Netherlands - Business and Policy Research

Postbus 7001
2701 AA Zoetermeer
Netherlands
+31 79 341 3634 (Phone)
+31 79 331 3742 (Fax)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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