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Schooling, capital constraints and entrepreneurial performance: the endogenous triangle

Parker, S.C.; van Praag, M.

Authors

S.C. Parker

M. van Praag



Abstract

We estimate the impact of schooling and capital constraints at the time of startup on the performance of Dutch entrepreneurial ventures, taking into account the potential endogeneity and interdependence of these variables. Instrumental variable estimates indicate that a 1 percentage point relaxation of capital constraints increases entrepreneurs' gross business incomes by 3.9% on average. Education enhances entrepreneurs' performance both directly—with a rate of return of 13.7%—and indirectly, because each extra year of schooling decreases capital constraints by 1.18 percentage points. The indirect effect of education on entrepreneurs' performance is estimated to be 3.0-4.6%.

Citation

Parker, S., & van Praag, M. (2006). Schooling, capital constraints and entrepreneurial performance: the endogenous triangle. Journal of Business & Economic Statistics, 24(4), 416-431. https://doi.org/10.1198/073500106000000215

Journal Article Type Article
Publication Date 2006-10
Deposit Date Apr 2, 2007
Journal Journal of Business and Economic Statistics
Print ISSN 0735-0015
Electronic ISSN 1537-2707
Publisher Taylor and Francis Group
Peer Reviewed Peer Reviewed
Volume 24
Issue 4
Pages 416-431
DOI https://doi.org/10.1198/073500106000000215
Keywords Entrepreneurship, Financial contraints, Human capital.
Public URL https://durham-repository.worktribe.com/output/1560368

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