Financial Capital, Human Capital, and the Transition to Self-Employment; Evidence from Intergenerational Links

Author(s)/Creator(s)

Thomas Dunn, Syracuse University
Douglas Holtz-Eakin, Syracuse University

Description/Abstract

The environment for business creation is central to economic policy, as entrepreneurs are believed to be forces of innovation, employment and economic dynamism. We use data from the National Longitudinal Surveys (NLS) to investigate the relative importance of financial and human capital exploiting the variation provided by intergenerational links. Specifically, we estimate the impacts of parental wealth and human capital on the probability that an individual will make the transition from a wage and salary job to self-employment. We find that young men’s own financial assets exert a statistically significant, but quantitatively modest effect on the transition to self-employment. In contrast, the capital of parents exerts a large influence. Parents’ strongest effect runs not through financial means, but rather through human capital, i.e., the intergenerational correlation in self-employment. This link is even stronger along gender lines.

Document Type

Working Paper

Date

6-1996

Language

English

Funder(s)

This research was in part funded by the Bureau of Labor Statistics

Funding ID

B9J43507

Series

Metropolitan Studies Program Series

Acknowledgements

The authors thank Donald Bruce and Chris Furgiuele for outstanding research assistance, and Esther Gray, Ann Wicks, and Jodi Woodson for their help in preparing the manuscript. They also thank seminar participants at the Bureau of Labor Statistics, NLS Summer Workshop, Cornell University, Princeton University, Syracuse University, and the University of Rochester for helpful comments.

Disciplines

Economic Policy | Economics | Public Affairs, Public Policy and Public Administration | Public Policy

ISSN

0732 507X

Additional Information

Metropolitan studies program series occasional piper no.181

Recommended Citation

Dunn, Thomas and Holtz-Eakin, Douglas, "Financial Capital, Human Capital, and the Transition to Self-Employment; Evidence from Intergenerational Links" (1996). Center for Policy Research. 452.
https://surface.syr.edu/cpr/452

Source

Local Input

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.