Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86434
Authors: 
Parker, Simon
van Praag, Mirjam
Year of Publication: 
2004
Series/Report no.: 
Tinbergen Institute Discussion Paper 04-106/3
Abstract: 
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%.
Subjects: 
entrepreneurship
self-employment
returns to education
capital constraint
liquidity constraint
borrowing constraint
JEL: 
J23
J24
J31
M13
Document Type: 
Working Paper

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