Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/62560 
Year of Publication: 
2012
Series/Report no.: 
IZA Discussion Papers No. 6819
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We assess the relevance of formal education for the productivity of the self-employed and distinguish between opportunity entrepreneurs, who voluntarily pursue a business opportunity, and necessity entrepreneurs, who lack alternative employment options. We expect differences in the returns to education between these groups because of different levels of control. We use the German Socio-economic Panel and account for the endogeneity of education and non-random selection. The results indicate that the returns to a year of education for opportunity entrepreneurs are 3.5 percentage points higher than the paid employees' rate of 8.1%, but 6.5 percentage points lower for necessity entrepreneurs.
Subjects: 
returns to education
opportunity
necessity
entrepreneurship
JEL: 
J23
J24
J31
I20
L26
Document Type: 
Working Paper

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