Human capital and entrepreneurs

If You Are So Smart, Why Aren't You an Entrepreneur? Returns to Cognitive and Social Ability: Entrepreneurs versus Employees

“…The returns to general ability are higher for entrepreneurs than for employees (indicated by the 28 The interacted effect of education and entrepreneur status is positive and significant in all income equations (not shown). This is consistent with earlier findings that the returns to education are higher for entrepreneurs than for employees (Van der Sluis et al, 2007;Van der Sluis et al, 2008). However, as was noted, in this case, education has been entered into the equations as such, without using any kind of instrumentation.…”

“…In Van der Sluis, Van Praag and Van Witteloostuijn (2005) and Van der Sluis and Van Praag (2007) we analyzed the relative returns to education for entrepreneurs and employees employing methods to deal with the endogenous nature of education (in an income equation) and selfselection of individuals into entrepreneurship versus wage employment. These studies show consistently that the returns to education are higher for entrepreneurs than for employees.…”

“…They conclude that, based on the NLSY79, the returns to education for entrepreneurs (relative to employees) are robust under corrections for possible differential underreporting of income, for entrepreneurs erroneously including capital income, for possible risk premiums included in entrepreneurs' incomes and for differences in the incidence of part-time work. Moreover, Van der Sluis and Van Praag (2007), analyze the relative returns to education upon the inclusion and exclusion of negative incomes.…”

“…However, as we shall argue, measuring the effect of abilities on incomes requires acknowledging education as a channel for the effect of abilities, and we will do so. Van der Sluis, Van Praag and Van Witteloostuijn (2005) and Van der Sluis and Van Praag (2007) analyze the relative returns to education for entrepreneurs and employees. They show consistently that the returns to education are higher for entrepreneurs than for employees.…”

Essays on the economic effects of non-contributory social protection

“…Empirical studies showed that education increased entrepreneurs' performance, with a rate of return of 6.1% -14.2%, which was higher than the private rates of return of employees (e.g., 14.2% compared to 10.7% in the case of the Unites States). One explanation for these findings was that education helped individuals solve capital constraints to start up a business (van der Sluis & van Praag, 2007).…”