Small Business Economics

, Volume 46, Issue 2, pp 311–324

Identifying the effect of college education on business and employment survival

Article

DOI: 10.1007/s11187-015-9686-5

Cite this article as:
Asoni, A. & Sanandaji, T. Small Bus Econ (2016) 46: 311. doi:10.1007/s11187-015-9686-5

Abstract

We use a multipronged identification strategy to estimate the effect of college education on business and employment survival. We account for the endogeneity of both education and business ownership with a competing risks duration model augmented with a college selection equation. We estimate the model jointly on the self-employed and salaried employees in the National Longitudinal Survey of Youth 1979. Unlike most previous studies, we find that college does not increase business survival. By contrast, a college degree significantly increases employment survival. Cognitive skills have a positive impact on survival for both the self-employed and employees. These findings suggest that college benefits the self-employed less than salaried, perhaps by generating skills more useful in employment than self-employment, or because of differences in the value of signaling.

Keywords

Business survival Employment survival College education Cognitive skills Locus of control 

JEL Classifications

C41 J24 L26 

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.Charles River AssociatesWashingtonUSA
  2. 2.IFN – Research Institute for Industrial EconomicsStockholmSweden
  3. 3.Institute for Economic and Business History Research (EHFF)StockholmSweden

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