Risk, Entrepreneurship and Human Capital Accumulation
Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series 97-37
25 Pages Posted: 4 Mar 1998
Date Written: July 1997
Entrepreneurial human capital plays a relatively more important role in intermediate income countries, but professional human capital is relatively more abundant in richer economies. Because the return to entrepreneurship is risky, individuals devote less time to the accumulation of entrepreneurial skills and more to the accumulation of professional skills as per capita income grows. Countries that initially have too little of either entrepreneurial or professional skills may end up in a development trap. The steady state may be characterized by either too much or too little education.
JEL Classification: J24, O11, O40
Suggested Citation: Suggested Citation