Can Entrepreneurship Rescue Me from the Job Mismatch Trap?

Abstract

We focus on the relationship between job mismatch – when someone’s work is not closely related to their skills, type, or level of education – and entrepreneurship. While prior research has focused on a particular kind of mismatch and the effect on entry, we show that different types of mismatch may have a heterogeneous impact on entrepreneurial entry and the type of entry (self-employment vs. new venture formation). Moreover, we look at the re-employment condition to understand if the choice of entering entrepreneurship might help escape from a condition of mismatch. Using longitudinal data from more than 90,000 graduates, we document the effects of job mismatch on entrepreneurship and contribute to the literature of entrepreneurial entry. We discuss implications for research, managers, and policymakers.