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Author: van Praag, C. Mirjam
Resulting in 3 citations.
1. van der Sluis, Justin
van Praag, C. Mirjam
Economic Returns to Education for Entrepreneurs: The Development of a Neglected Child in the Family of Economics of Education?
Swedish Economic Policy Review 11,2 (2004): 183-226.
Also: http://www.sweden.gov.se/content/1/c6/09/52/74/1c811916.pdf
Cohort(s): NLS General, NLSY79
Publisher: Swedish Economic Policy Review
Keyword(s): Educational Returns; Entrepreneurship; Human Capital; Locus of Control (see Rotter Scale); Rotter Scale (see Locus of Control); Self-Employed Workers; Variables, Instrumental

Permission to reprint the abstract has not been received from the publisher.

Entrepreneurship is becoming an increasingly prominent issue in both academic and policy circles. Entrepreneurs are often credited with innovating new products, discovering new markets, and displacing ageing incumbents in a process of "creative destruction". But it is also recognized that if entrepreneurs face constraints such as limited human capital, then these economic benefits might not be realized. This realization has prompted several governments to devise public programs to encourage entrepreneurship. Underlying most of these programs is a belief that human capital affects entrepreneurs' performance in practice. The measurement of the (determinants of the) return to entrepreneurial (human) capital is thus relevant for devising (government and lenders') programs to realize the optimal economic benefits from entrepreneurship. These are often larger than the private benefits accruing to entrepreneurs.

However, as we demonstrate in this paper, the effect of formal schooling, one of the most prominent manifestations of human capital, on entrepreneur performance has not yet been consistently measured, due to shortcomings in the empirical strategies applied so far. We discuss these shortcomings as well as some potential solutions that we borrow from the technically more sophisticated literature on the returns to education for employees. Then, we will discuss two recent applications of such more advanced empirical strategies to consistently estimate the causal and distinct effect of formal education on entrepreneurial income. The first study, by Van der Sluis, Van Praag and Van Witteloostuijn (2004) (VVW hereafter) pertains to the US. It compares the rate of return to education for entrepreneurs to the rate of return for employees. The second study, by Parker and Van Praag (2004) (PvP hereafter) pertains to Europe (The Netherlands). It isolates the causal effect of education from the inter-related effect of capital constraints on the entrepreneur's perf ormance. The final sections of this paper will discuss the results from those recent studies, and provide conclusions and policy implications.

Bibliography Citation
van der Sluis, Justin and C. Mirjam van Praag. "Economic Returns to Education for Entrepreneurs: The Development of a Neglected Child in the Family of Economics of Education?" Swedish Economic Policy Review 11,2 (2004): 183-226.
2. van der Sluis, Justin
van Praag, C. Mirjam
van Witteloostuijn, A.
Why Are the Returns to Education Higher for Entrepreneurs Than for Employees?
Working Paper, Faculty of Economics and Business, University of Amsterdam, January 2006.
Also: http://www1.fee.uva.nl/pp/bin/408fulltext.pdf
Cohort(s): NLSY79
Publisher: Faculty of Economics and Business, University of Amsterdam
Keyword(s): Earnings; Educational Returns; Entrepreneurship; Income; Locus of Control (see Rotter Scale); Rotter Scale (see Locus of Control); Self-Employed Workers; Variables, Instrumental

Permission to reprint the abstract has not been received from the publisher.

We compare the returns to education (RTE) for entrepreneurs and employees, based on 19 waves of the NLSY database. By using instrumental variable techniques (IV) and taking account of selectivity, we find that the RTE are significantly higher for entrepreneurs than for employees (18.3 percent and 9.9 percent, respectively). We perform various analyses in an attempt to explain the difference. We find (indirect) support for the argument that the higher RTE for entrepreneurs is due to fewer (organizational) constraints faced by entrepreneurs when optimizing the profitable employment of their education.
Bibliography Citation
van der Sluis, Justin, C. Mirjam van Praag and A. van Witteloostuijn. "Why Are the Returns to Education Higher for Entrepreneurs Than for Employees?." Working Paper, Faculty of Economics and Business, University of Amsterdam, January 2006.
3. van der Sluis, Justin
van Praag, C. Mirjam
van Witteloostuijn, A.
Why Are the Returns to Education Higher for Entrepreneurs than for Employees?
IZA DP No. 3058, Institute for the Study of Labor, September 2007.
Also: ftp://repec.iza.org/RePEc/Discussionpaper/dp3058.pdf
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Earnings; Educational Returns; Entrepreneurship; Income; Locus of Control (see Rotter Scale); Rotter Scale (see Locus of Control); Self-Employed Workers; Variables, Instrumental

Permission to reprint the abstract has not been received from the publisher.

We compare the returns to education (RTE) for entrepreneurs and employees, based on 19 waves of the NLSY database. By using instrumental variable techniques (IV) and taking account of selectivity, we find that the RTE are significantly higher for entrepreneurs than for employees (14 per cent and 10 per cent, respectively). We perform various analyses in an attempt to explain the difference. We find (indirect) support for the argument that the higher RTE for entrepreneurs is due to fewer (organizational) constraints faced by entrepreneurs when optimizing the profitable employment of their education.
Bibliography Citation
van der Sluis, Justin, C. Mirjam van Praag and A. van Witteloostuijn. "Why Are the Returns to Education Higher for Entrepreneurs than for Employees?." IZA DP No. 3058, Institute for the Study of Labor, September 2007.