Risk, Balanced Skills and Entrepreneurship

29 Pages Posted: 24 Dec 2011

See all articles by Chihmao Hsieh

Chihmao Hsieh

Yonsei University

Simon C. Parker

University of Western Ontario; Durham University - Department of Economics and Finance; IZA Institute of Labor Economics

Mirjam van Praag

University of Amsterdam - Department of Economics; Copenhagen Business School; Tinbergen Institute; IZA Institute of Labor Economics

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Abstract

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.

Keywords: entrepreneurship, jack-of-all-trades, risk, human capital, occupational choice

JEL Classification: D81, J24, L26, M13

Suggested Citation

Hsieh, Chihmao and Parker, Simon C. and van Praag, Mirjam and van Praag, Mirjam, Risk, Balanced Skills and Entrepreneurship. Available at SSRN: https://ssrn.com/abstract=1976531 or http://dx.doi.org/10.2139/ssrn.1976531

Chihmao Hsieh (Contact Author)

Yonsei University ( email )

Seoul
Korea, Republic of (South Korea)

Simon C. Parker

University of Western Ontario ( email )

1151 Richmond Street
Suite 2
London, Ontario N6A 5B8
Canada

Durham University - Department of Economics and Finance ( email )

23/26 Old Elvet
Durham DH1 3HY
United Kingdom
+44 191 3747271 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Mirjam Van Praag

Copenhagen Business School ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4096 (Phone)
+31 20 525 4182 (Fax)

Tinbergen Institute

Gustav Mahlerlaan
Amsterdam
Netherlands

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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