Does College Education Reduce Small Business Failure?
37 Pages Posted: 23 Dec 2014
Date Written: November 30, 2014
We estimate the effect of college education on business survival using the NLSY79. The endogeneity of both education and business ownership is accounted for by a competing risks duration model augmented with a college selection equation. Contrary to the previous literature, we find no effect of college education on business failure. College however significantly increases "employment survival". Unlike college, cognitive skills have a positive impact on employment survival for both the self-employed and employees. The results suggest that college affects the self-employed and salaried employees in different ways, for example generating skills more useful in employment than self-employment.
Keywords: Selection, Entrepreneurship, College Education, Intelligence, Self-confidence
JEL Classification: C41, J24, L26
Suggested Citation: Suggested Citation