Scandinavian Working Papers in Economics

Discussion Papers on Economics,
University of Southern Denmark, Department of Economics

No 4/2009: Entrepreneurial human capital

Jens Iversen, Nikolaj Malchow-Møller () and Anders Sørensen
Additional contact information
Jens Iversen: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Nikolaj Malchow-Møller: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Anders Sørensen: Department of Economics, Postal: Copenhagen Business School, Porcelænshaven 16A, 2000 Frederiksberg, Denmark

Abstract: We argue that formal schooling and wage-work experience are complementary types of human capital for entrepreneurs. Strong empirical support is found for this hypothesis as the interaction term between schooling and actual wage-work experience enters positively and significantly in a Mincer equation, whereas the effect of schooling in the absence of wage-work experience is insignificant. These results are extremely robust towards more flexible specifications, including fixed-effects estimations dealing with unobserved heterogeneity. For wage workers, the interaction term is negligible, confirming that the complementarity is a distinct characteristic of entrepreneurial human capital.

Keywords: Schooling; experience; complementarity; entrepreneurs

JEL-codes: I21; J24; J40

35 pages, April 24, 2009

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