Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147964
Authors: 
Lindquist, Matthew J.
Sol, Joeri
van Praag, Mirjam C.
Vladasel, Theodor
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 10278
Abstract: 
Promoting entrepreneurship has become an increasingly important part of the policy agenda in many countries. The success of such policies, however, rests in part on the assumption that entrepreneurship outcomes are not fully determined at a young age by factors that are unrelated to current policy. We test this assumption and assess the importance of family background and neighborhood effects as determinants of entrepreneurship, by estimating sibling correlations in entrepreneurship. We find that between 20 and 50 percent of the variance in different entrepreneurial outcomes is explained by factors that siblings share (i.e., family background and neighborhood effects). The average is 28 percent. Hence, entrepreneurship is far less than fully determined at a young age. Our estimates increase only a little when allowing for differential treatment within families by gender and birth order. We then investigate a comprehensive set of mechanisms that explain sibling similarities. Parental entrepreneurship plays a large role in explaining sibling similarities, as do shared genes. We show that neighborhood effects matter, but are rather small, particularly when compared with the overall importance of family factors. Sibling peer effects, and parental income and education matter even less.
Subjects: 
entrepreneurship
family background
intergenerational persistence
neighborhood effects
occupational choice
sibling correlations
JEL: 
D13
J62
L26
Document Type: 
Working Paper

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