Do elite colleges matter? The impact on entrepreneurship decisions and career dynamics
Year: 2021
Type: article
Abstract: Elite college attendance significantly impacts students' entrepreneurship decisions and career dynamics. We find that an elite college degree is positively correlated with entrepreneurship (i.e., owning an incorporated business) but not with other self-employment forms. Our overlapping generations model captures self-selection in education and career choices based on heterogeneous ability and family wealth endowments over the life-cycle. Our estimates show that (1) entrepreneurs and other self-employed individuals require different types of human capital, and (2) elite colleges generate considerably more human capital gain than ordinary colleges, particularly for entrepreneurs. Distinguishing between elite and ordinary colleges improves our prediction of entrepreneurship decisions. Providing subsidies for elite colleges is more efficient than subsidizing their ordinary counterparts to encourage entrepreneurship, enhance intergenerational mobility, and enhance welfare. In contrast, although start-up subsidy increases entrepreneurship, it does not improve their performance, and it is inferior to education subsidy in generating efficiency, equality, and intergenerational mobility.
Source: Quantitative Economics
DOI: 10.3982/qe1587
Authors: Naijia Guo, Charles Ka Yui Leung
Institutions: Chinese University of Hong Kong, City University of Hong Kong
Language: English
Subfield: Management of Technology and Innovation
Domain: Social Sciences
Open Access status: diamond
Awards: Strategy for National Growth and Prosperity: a Data Analytics Approach (Center for Research in Econometric Theory and Applications, National Taiwan University)( III ), Economic stagnation and widening wealth inequality: Crises of the world economy and a construction of a unified macroeconomic theory, Behavioral-Economic Analysis of Long-Run Stagnation
OpenAlex ID: W3166029905