Schooling, Capital Constraints and Entrepreneurial Performance

Arbeitspapier

We estimate the impact of schooling and capital constraints at the time of startup on the performance of Dutch entrepreneurial ventures, taking into account the potential endogeneity and interdependence of these variables. Instrumental variable estimates indicate that a 1 percentage point relaxation of capital constraints increases entrepreneurs' gross business incomes by 3.9% on average. Education enhances entrepreneurs' performance both directly—with a rate of return of 13.7%—and indirectly, because each extra year of schooling decreases capital constraints by 1.18 percentage points. The indirect effect of education on entrepreneurs' performance is estimated to be 3.0–4.6%.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 04-106/3

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Wage Level and Structure; Wage Differentials ; New Firms; Startups
• Subject: entrepreneurship ; self-employment ; returns to education ; capital constraint ; liquidity constraint ; borrowing constraint ; Bildungsertrag ; Entrepreneurship-Ansatz ; Selbstständige ; Betriebliche Liquidität ; Niederlande

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Parker, Simon ; van Praag, Mirjam
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/86434