Entrepreneurial School Dropouts: A Model on Signalling, Education and Entrepreneurship
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Skogstrøm, Jens Fredrik B.
Number in series: 10
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.
Project:Oppdragsgiver: Norges forskningsråd
Oppdragsgivers prosjektnr.: 201336
Frisch prosjekt: 6513 - Entrepreneurship and Gender in Norway - Entrepreneurship, Gender, and Social capital