Technical Change and Entrepreneurship

66 Pages Posted: 24 Jun 2020

See all articles by Sergio Salgado

Sergio Salgado

The Wharton School, University of Pennsylvania

Date Written: June 2, 2020

Abstract

In this paper, I document a significant decline in the share of entrepreneurs among US households over the last three decades. Most of this decline is accounted for by a drop in the share of entrepreneurs among college graduates. Using an otherwise standard entrepreneurial choice model with two skill groups of individuals — high skill and low skill — I then argue that the decline in entrepreneurship is the equilibrium outcome of two technological forces that have increased the returns to high-skill labor since the 1980s: the skill-biased technical change and the decrease in the cost of capital goods. I find that these two forces jointly account for three-quarters of the decline in the share of entrepreneurs observed in the United States over the last 30 years.

Keywords: Entrepreneurship, Skill-Biased Technical Change

JEL Classification: E20

Suggested Citation

Salgado, Sergio, Technical Change and Entrepreneurship (June 2, 2020). Available at SSRN: https://ssrn.com/abstract=3616568 or http://dx.doi.org/10.2139/ssrn.3616568

Sergio Salgado (Contact Author)

The Wharton School, University of Pennsylvania ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://https://sergiosalgadoi.wordpress.com/

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