Educational Mismatch, Work Outcomes, and Entry into Entrepreneurship

Forthcoming in Organization Science July/August 2016

43 Pages Posted: 5 Aug 2016

See all articles by Briana Stenard

Briana Stenard

Mercer University - Eugene W. Stetson School of Business and Economics

Henry Sauermann

ESMT European School of Management and Technology

Date Written: August 3, 2016

Abstract

A growing body of research explores how employees’ organizational context shapes their entrepreneurial activity. We add to this work by examining how “educational mismatch” – when a job does not utilize the skills an employee has acquired during education – relates to subsequent transitions into entrepreneurship. While prior research has focused on mismatch due to labor market frictions, workers may also enter mismatches for other reasons such as family obligations or a change in career interests. Different reasons, in turn, may relate in distinct ways to wages and job satisfaction and thus to the opportunity costs of entering entrepreneurship. Moreover, mismatch may also affect human capital development, including the formation of a broader range of skills that is beneficial in entrepreneurship. Using longitudinal data from over 25,000 scientists and engineers, we document a broad range of reasons for educational mismatch and show that the relationships between educational mismatch and wages, job satisfaction, and skill variety differ significantly depending upon the reason for a mismatch. Mismatched individuals are more likely to enter into entrepreneurship in a subsequent period, an effect that goes beyond higher labor mobility per se. Both lower opportunity costs – primarily low job satisfaction – and greater skill variety appear to link educational mismatch to subsequent entrepreneurship. We discuss implications for research, managers, and policy makers.

Keywords: entrepreneurship, human capital, STEM careers, labor markets

JEL Classification: I26, J24, L26, M13

Suggested Citation

Stenard, Briana and Sauermann, Henry, Educational Mismatch, Work Outcomes, and Entry into Entrepreneurship (August 3, 2016). Forthcoming in Organization Science July/August 2016 , Available at SSRN: https://ssrn.com/abstract=2818018

Briana Stenard (Contact Author)

Mercer University - Eugene W. Stetson School of Business and Economics ( email )

United States

Henry Sauermann

ESMT European School of Management and Technology ( email )

Schlossplatz 1
10117 Berlin
Germany

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