Education and entrepreneurial success
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This paper estimates the effect of education on the success of entrepreneurial activity, using survey data from Malawi. An instrument variable approach is used to address the endogeneity of education. We find a significant and substantial effect of an added year of primary education on entrepreneurial profitability. This is consistent with theoretical arguments that primary schooling provides a generalised form of competence that underpins the variety of skills an entrepreneur needs to succeed in business. Results are robust to non-random selection into entrepreneurship.
KeywordsEntrepreneurship Returns to schooling Endogeneity Malawi
JEL ClassificationsL26 J24 C30
The authors thank Erik Ø. Sørensen, Magnus Hatlebakk, Bertil Tungodden, Eyolf Jul-Larsen, Øivind Anti Nilsen, and two anonymous reviewers for valuable comments and advice. We are grateful to the National Statistical Office (NSO) of Malawi for providing the data. However, further processing and application of the data was the responsibility of the authors and the views expressed are those of the authors and not of the NSO.
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