Entrepreneurship

56 Pages Posted: 10 Jan 2003  

Edward P. Lazear

Stanford Graduate School of Business; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Multiple version iconThere are 4 versions of this paper

Date Written: April 2003

Abstract

The theory proposed below is that entrepreneurs are jacks-of-all-trades who may not excel in any one skill, but are competent in many. A coherent model of the choice to become an entrepreneur is presented. The primary implication is that individuals with balanced skills are more likely than others to become entrepreneurs. The model provides implications for the proportion of entrepreneurs by occupation, by income and yields a number of predictions for the distribution of income by entrepreneurial status. Using a data set of Stanford alumni, the predictions are tested and found to hold. In particular, by far the most important determinant of entrepreneurship is having background in a large number of different roles. Further, income distribution predictions, e.g., that there are a disproportionate number of entrepreneurs in the upper tail of the distribution, are borne out.

Keywords: Entrepreneurship, Occupation Choice, Diversity, Jack-of-all-trades

JEL Classification: J4

Suggested Citation

Lazear, Edward P., Entrepreneurship (April 2003). IZA Discussion Paper No. 760. Available at SSRN: https://ssrn.com/abstract=333802

Edward P. Lazear (Contact Author)

Stanford Graduate School of Business ( email )

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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