Entrepreneurship, Human Capital, and Labor Demand: A Story of Signaling and Matching

46 Pages Posted: 22 Aug 2015

See all articles by Elisabeth Bublitz

Elisabeth Bublitz

Hamburg Institute of International Economics (HWWI)

Kristian Nielsen

Aalborg University - Department of Business and Management

Florian Noseleit

University of Groningen - Faculty of Economics and Business

Bram Timmermans

Norwegian School of Economics (NHH); Aalborg University, Department of Business and Management

Date Written: July 31, 2015

Abstract

Contrary to employees, there is no clear evidence that entrepreneurs’ education positively effects income. In this study we propose that entrepreneurs can benefit from their education as a signal during the recruitment process of employees. This process is then assumed to follow a matching of equals among equals. Using rich data from Germany and Denmark we fully confirm a matching on qualification levels for high-skilled employees, partially for medium-skilled employees but not for low-skilled employees, suggesting that as skill levels of employees decrease it becomes equally probable that they work for different founders. Founder qualification is the most reliable predictor of recruitment choices over time. Our findings are robust to numerous control variables as well as across industries and firm age.

Keywords: returns to education, labor demand of small firms, human capital, matching, signaling

JEL Classification: J23, J24, J21

Suggested Citation

Bublitz, Elisabeth and Nielsen, Kristian and Noseleit, Florian and Timmermans, Bram, Entrepreneurship, Human Capital, and Labor Demand: A Story of Signaling and Matching (July 31, 2015). Available at SSRN: https://ssrn.com/abstract=2638236 or http://dx.doi.org/10.2139/ssrn.2638236

Elisabeth Bublitz (Contact Author)

Hamburg Institute of International Economics (HWWI) ( email )

Heimhuder Strasse 71
Hamburg, DE Hamburg 20148
Germany

Kristian Nielsen

Aalborg University - Department of Business and Management ( email )

Aalborg, DK-9220
Denmark
+45 99408334 (Phone)

Florian Noseleit

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Bram Timmermans

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

Aalborg University, Department of Business and Management

Fibigerstræde 4
Aalborg, DK-9220
Denmark

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