Who Values the Status of the Entrepreneur?

Parker and Van Praag (2009) showed, based on theory, that the group status of the profession 'entrepreneurship' shapes people's occupational preferences and thus their choice behavior. The current study focuses on the determinants and consequences of the group status of a profession, entrepreneurship in particular. If the group status of entrepreneurship is related to individual choice behavior, it is policy relevant to better understand this relationship and the determinants of the status of the entrepreneur. For reasons outlined in the introduction, this study focuses on (800) students in the Netherlands. We find that the status of occupations is mostly determined by the required level of education, the income level to be expected and respect. Furthermore, our results imply that entrepreneurship is associated with hard work, high incomes, but little power and education. Moreover, we find evidence that individual characteristics, such as entrepreneurship experience, vary systematically with the perceived status of occupations, thereby contributing ammunition to a fundamental discussion in the literature. Finally, we find a strong association between the perceived status of the entrepreneur and the estimated likelihood and willingness to become an entrepreneur.entrepreneurship, self-employment, occupational choice, occupational status, group status, peer group effects

The Benefits of Being Economics Professor A (and not Z)

Alphabetic name ordering on multi-authored academic papers, which is the convention in the economics discipline and various other disciplines, is to the advantage of people whose last name initials are placed early in the alphabet. As it turns out, Professor A, who has been a first author more often than Professor Z, will have published more articles and experienced afaster growth rate over the course of her career as a result of reputation and visibility. Moreover, authors know that name ordering matters and indeed take ordering seriously: Several characteristics of an author group composition determine the decision to deviate from the default alphabetic name order to a significant extent.performance measurement, incentives, economists, name ordering

Initial Capital Constraints Hinder Entrepreneurial Venture Performance: An empirical analysis

A novel method is applied to evaluate the effect of capital constraints on entrepreneurial performance on a panel of 1,000 Dutch entrepreneurs. We find that initial capital constraints hinder entrepreneurs in their performance, even when we control for various human capital and other factors that might affect both performance and credit scoring outcomes. We use a direct individual indicator variable for initial capital constraints. Previous research with the same objective used indirect indicators of wealth, inheritances or windfall gains, where it remains unknown whether the entrepreneur indeed suffered from capital constraints. This drawback is not attached to our (neither perfect) approach so that policy implications will become more evident.entrepreneurship, small business founders, success, venture performance, wealth/capital/borrowing constraint

The More Business Owners the Merrier? The Role of Tertiary Education

Policy in developed countries is often based on the assumption that higher business ownership rates induce economic value. However, not everyone can be a business owner and many labour market participants would contribute more to economic value creation as an employee than a business owner. The implied existence of an ‘optimal’ business ownership rate would thus replace the dictum of ‘the more business owners, the merrier’. We attempt to establish whether there is such an optimal level, while investigating the role of tertiary education. Two findings stand out. First, by estimating extended versions of traditional Cobb Douglas production functions on a sample of 19 OECD countries over the period 1981-2006, we find indeed robust evidence of an optimal business ownership rate. Second, the optimal business ownership rate tends to decrease with participation rates in tertiary education.  

Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework

We combine two empirical observations in a general equilibrium occupational choice model. The first is that entrepreneurs have more control than employees over the employment of and accruals from assets, such as human capital. The second observation is that entrepreneurs enjoy higher returns to human capital than employees. We present an intuitive model showing that more control (observation 1) may be an explanation for higher returns (observation 2); its main outcome is that returns to ability are higher in higher control environments. This provides a theoretical underpinning for the control-based explanation for higher returns to human capital for entrepreneurs.Entrepreneurship; Ability; Occupational Choice; Human Capital; Wage Structure

The Value Relevance of Forced Top Management Departures

This paper studies the value relevance of management turnover based on a sample of Dutch events. Consistent with previous studies we find weak or insignificant aggregate announcement effects on stock prices. The evidence is in conflict with effective internal monitoring from which positive abnormal returns would result. The hypothesis is that two opposing forces underlie the inconclusive result: (1) A positive real effect of the unanticipated forced resignation of a poor performing manager and (2) A negative information effect if the change signals worse management performance than anticipated. To test the hypothesis, announcement effects on trading volumes are analyzed too. Our conclusion supports the hypothesis: forced management departures are value relevant.top management turnover/resignations/changes; corporate governance; internal monitoring; value relevance; event study.

It's the Opportunity Cost, Stupid! How Self-Employment Responds to Financial Incentives of Return, Risk and Skew

There is no robust empirical support for the effect of financial incentives on the decision to work in self-employment rather than as a wage earner. In the literature, this is seen as a puzzle. We offer a focus on the opportunity cost, i.e. the wages given up as an employee. Information on income from self-employment is of inferior quality and this is not just a problem for the outside researcher, it is an imminent problem of the individual considering self-employment. We also argue that it is not only the location of an income distribution that matters and that dispersion and (a)symmetry should not be ignored. We predict that higher mean, lower variance and higher skew in the wage distribution in a particular employment segment reduce the inclination to prefer self-employment above employee status. Using a sample of 56,000 recent graduates from a Dutch college or university, grouped in approximately 120 labor market segments, we find significant support for these propositions. The results survive various robustness checks on specifications and assumptions.entrepreneurship, self-employment, wage-employment, income distribution, income risk, income skew, income variance, occupational choice, labor market entry, labor market segments, opportunity cost

The Impact of Entrepreneurship Education on Entrepreneurship Competencies and Intentions: An Evaluation of the Junior Achievement Student Mini-Company Program

This paper analyzes the impact of a leading entrepreneurship education program on college students’ entrepreneurship competencies and intentions using an instrumental variables approach in a difference-in-differences framework. We exploit that the program was offered to students at one location of a school but not at another location of the same school. Location choice (and thereby treatment) is instrumented by the relative distance of locations to parents’ place of residence. The results show that the program does not have the intended effects: the effect on students’ self-assessed entrepreneurial skills is insignificant and the effect on the intention to become an entrepreneur is even significantly negative.entrepreneur competencies, program evaluation, entrepreneurship education, entrepreneur intentions

The more business owners, the merrier? The role of tertiary education

Policy in developed countries is often based on the assumption that higher business ownership rates induce economic value. Recent microeconomic empirical evidence casts doubts on the validity of this assumption or, at least, leads to a more nuanced view: Especially the top performing business owners are responsible for the value creation of business owners. Other labor market participants would contribute more to economic value creation as an employee than a business owner. The implied existence of an 'optimal' business ownership rate would thus replace the dictum of 'the more business owners, the merrier'. We attempt to establish whether there is such an optimal level, while investigating the role of tertiary education. Two findings stand out. First, by estimating extended versions of traditional Cobb Douglas production functions on a sample of 19 OECD countries over the period 1981-2006, we find indeed robust evidence of an optimal business ownership rate (at around 12.5%, on average). Second, the relation between business ownership and macroeconomic productivity is steeper for countries with higher participation rates in tertiary education. Thus, the optimal business ownership rate tends to decrease with tertiary education levels. This is consistent with microeconomic theory and evidence showing that entrepreneurs with superior levels of human capital run larger firms