Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1050: Does College Education Reduce Small Business Failure?

Andrea Asoni () and Tino Sanandaji ()
Additional contact information
Andrea Asoni: Charles River Associates
Tino Sanandaji: Research Institute of Industrial Economics (IFN)

Abstract: We estimate the effect of college education on business survival using the NLSY79. The endogeneity of both education and business ownership is accounted for by a competing risks duration model augmented with a college selection equation. Contrary to the previous literature, we fi…nd no effect of college education on business failure. College however signi…cantly increases “employment survival.” Unlike college, cognitive skills have a positive impact on employment survival for both the self-employed and employees. The results suggest that college affects the self-employed and salaried employees in different ways, for example generating skills more useful in employment than self-employment.

Keywords: Selection; Entrepreneurship; College Education; Intelligence; Self-con…dence

JEL-codes: C41; J24; L26

36 pages, December 17, 2014

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