Abstract
Abstract By allowing agents to switch from entrepreneurship to wage work and vice versa over the life cycle, this study proposes a dynamic Jacks-of-All-Trades (JAT) model where entrepreneurs invest in highly varied skills to manage their business. We simultaneously endogenize human capital investment and occupational decisions. Using the survey data of Iowa State alumni graduating between 1982 and 2006, we find that the probability of selecting a broad curriculum, having a more varied career, and becoming an entrepreneur are jointly positively correlated. Academic diversity is found to be initially important in starting a business shortly after completing schooling, but its importance declines over time.
Highlights
By allowing agents to switch from entrepreneurship to wage work and vice versa over the life cycle, this study proposes a dynamic Jacks-of-All-Trades (JAT) model where entrepreneurs invest in highly varied skills to manage their business
As economies are exposed to more rapid changes in technologies, competitive pressures and price shocks, it becomes increasingly important to identify and develop the policies and skills that lead to successful entrepreneurial entry
Åstebro and Thompson (2011) and Oberschachtsiek (2009) examined whether the correlation between breadth of human capital investments and entrepreneurship was due instead to a taste for variety. They hypothesized that individuals with greater tastes for variety may seek out more varied careers including entrepreneurial ventures, finding mixed evidence on whether the taste for variety or JAT was more consistent with the data
Summary
Would have chosen to be laborers in period if they had perfect knowledge of their entrepreneurial abilities in period 1 (i.e., if they knew ε2). They remain entrepreneurs because their human capital investments in period 1 are irreversible and they cannot acquire enough specialized human capital in period 2 to make a transfer to laborer financially attractive.. Individuals are more likely to persist as entrepreneurs when avenues for additional human capital accumulations in period 2 are limited zations on relative to period 1 ÀH þH 2 positive realiÁ 2 ; and so the range of earnings for persisting entrepreneurs is indicated by the upward sloping line.
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