Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 10/2012: Entrepreneurial School Dropouts: A Model on Signalling, Education and Entrepreneurship
Jens Fredrik Baumgarten Skogstrøm ()
Additional contact information
Jens Fredrik Baumgarten Skogstrøm: Ragnar Frisch Centre for Economic Research,, Postal: Ragnar Frisch Centre for Economic Research, Gaustadalleen 21 , 0349 Oslo, Norway
Abstract: I present a theory on the relationship between educational choice and entrepreneurship in a labour market with asymmetric information. The model shows that, in a labour market where education is used as a signalling device, an imperfect relationship between productivity in education and in the labour market can lead to an equilibrium where a fraction of the high-ability individuals choose to quit school and become entrepreneurs. Using a comprehensive set of Norwegian register data, I find that this is prediction is confirmed empirically: Individuals combining low education with high ability have the highest entrepreneurship rates in the population.
Keywords: Entrepreneurship; self-employment; education; ability
38 pages, April 2, 2012
Full text files
Memo-10-2012.pdf
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