Why Do Entrepreneurial Parents Have Entrepreneurial Children?

49 Pages Posted: 28 Jul 2012

See all articles by Matthew J. Lindquist

Matthew J. Lindquist

Stockholm University - Swedish Institute for Social Research (SOFI)

Joeri Sol

University of Amsterdam

Mirjam van Praag

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

Multiple version iconThere are 2 versions of this paper

Abstract

Parental entrepreneurship is a strong, probably the strongest, determinant of own entrepreneurship. We explore the origins of this intergenerational association in entrepreneurship. In particular, we identify the separate effects of pre- and post-birth factors (nature and nurture), by using a unique dataset of Swedish adoptees. Its unique characteristic is that it not only includes data on occupational status for the adoptees and their adoptive parents, but also for their biological parents. Moreover, we use comparable data on entrepreneurship for a large, representative sample of the Swedish population. Based on the latter sample, and consistent with previous findings, we show that parental entrepreneurship increases the probability of children's entrepreneurship by about 60%. We further show that for adoptees, both biological and adoptive parents make significant contributions. These effects, however, are quite different in size. The effect of post-birth factors (adoptive parents) is approximately twice as large as the effect of pre-birth factors (biological parents). The sum of these two effects for adopted children is almost identical to the intergenerational transmission of entrepreneurship for own-birth children. We explore several candidate explanations for this important post-birth effect and present suggestive evidence in favor of role modeling.

Keywords: occupational choice, intergenerational mobility, self-employment, entrepreneurship, adoption, role model

JEL Classification: J24, J62, L26

Suggested Citation

Lindquist, Matthew J. and Sol, Joeri and van Praag, Mirjam, Why Do Entrepreneurial Parents Have Entrepreneurial Children?. IZA Discussion Paper No. 6740. Available at SSRN: https://ssrn.com/abstract=2119047

Matthew J. Lindquist (Contact Author)

Stockholm University - Swedish Institute for Social Research (SOFI) ( email )

Kyrkgatan 43B
SE-106 91 Stockholm
Sweden

Joeri Sol

University of Amsterdam ( email )

Mirjam Van Praag

University of Amsterdam - Department of Economics ( email )

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

Copenhagen Business School ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Tinbergen Institute

Gustav Mahlerlaan
Amsterdam
Netherlands

IZA Institute of Labor Economics

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

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