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Author: van Praag, C. Mirjam

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1.	Hartog, Joop van Praag, C. Mirjam van der Sluis, Justin
1.	If You Are So Smart, Why Aren't You an Entrepreneur? Returns to Cognitive and Social Ability: Entrepreneurs Versus Employees Journal of Economics and Management Strategy 19,4 (Winter 2010): 947-989. Also: https://onlinelibrary.wiley.com/doi/10.1111/j.1530-9134.2010.00274.x Cohort(s): NLSY79 Publisher: Wiley Online Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); Earnings; Entrepreneurship; Noncognitive Skills Permission to reprint the abstract has not been received from the publisher. How valuable are cognitive and social abilities for entrepreneurs' relative to employees' earnings? We answer three questions: (1) To what extent does a composite measure of ability affect an entrepreneur's earnings relative to wages earned by employees? (2) Do different cognitive abilities (e.g., math ability, language, or verbal ability) and social ability affect earnings of entrepreneurs and employees differently?, and (3) Does the balance in these measured ability levels affect an individual's earnings? Our (difference-of-difference) estimates of the returns to ability for spells in entrepreneurship versus wage employment account for selectivity into entrepreneurial positions insofar as they are determined by fixed individual characteristics. Our robust results provide the following answers to the three questions: General ability has a stronger impact on entrepreneurial incomes than on wages. Moreover, entrepreneurs and employees benefit from different sets of specific abilities: verbal and clerical abilities have a stronger impact on wages, whereas mathematical, social, and technical ability are more valuable for entrepreneurs. The balance in the various kinds of ability also generates a higher income, but only for entrepreneurs: This finding supports Lazear's Jack-of-all-Trades theory.
	Bibliography Citation Hartog, Joop, C. Mirjam van Praag and Justin van der Sluis. "If You Are So Smart, Why Aren't You an Entrepreneur? Returns to Cognitive and Social Ability: Entrepreneurs Versus Employees." Journal of Economics and Management Strategy 19,4 (Winter 2010): 947-989.

2.	van der Sluis, Justin van Praag, C. Mirjam
2.	Economic Returns to Education for Entrepreneurs: The Development of a Neglected Child in the Family of Economics of Education? Swedish Economic Policy Review 11,2 (2004): 183-226. Also: http://www.sweden.gov.se/content/1/c6/09/52/74/1c811916.pdf Cohort(s): NLS General, NLSY79 Publisher: Swedish Economic Policy Review Keyword(s): Educational Returns; Entrepreneurship; Human Capital; Locus of Control (see Rotter Scale); Rotter Scale (see Locus of Control); Self-Employed Workers; Variables, Instrumental Permission to reprint the abstract has not been received from the publisher. Entrepreneurship is becoming an increasingly prominent issue in both academic and policy circles. Entrepreneurs are often credited with innovating new products, discovering new markets, and displacing ageing incumbents in a process of "creative destruction". But it is also recognized that if entrepreneurs face constraints such as limited human capital, then these economic benefits might not be realized. This realization has prompted several governments to devise public programs to encourage entrepreneurship. Underlying most of these programs is a belief that human capital affects entrepreneurs' performance in practice. The measurement of the (determinants of the) return to entrepreneurial (human) capital is thus relevant for devising (government and lenders') programs to realize the optimal economic benefits from entrepreneurship. These are often larger than the private benefits accruing to entrepreneurs. However, as we demonstrate in this paper, the effect of formal schooling, one of the most prominent manifestations of human capital, on entrepreneur performance has not yet been consistently measured, due to shortcomings in the empirical strategies applied so far. We discuss these shortcomings as well as some potential solutions that we borrow from the technically more sophisticated literature on the returns to education for employees. Then, we will discuss two recent applications of such more advanced empirical strategies to consistently estimate the causal and distinct effect of formal education on entrepreneurial income. The first study, by Van der Sluis, Van Praag and Van Witteloostuijn (2004) (VVW hereafter) pertains to the US. It compares the rate of return to education for entrepreneurs to the rate of return for employees. The second study, by Parker and Van Praag (2004) (PvP hereafter) pertains to Europe (The Netherlands). It isolates the causal effect of education from the inter-related effect of capital constraints on the entrepreneur's perf ormance. The final sections of this paper will discuss the results from those recent studies, and provide conclusions and policy implications.
	Bibliography Citation van der Sluis, Justin and C. Mirjam van Praag. "Economic Returns to Education for Entrepreneurs: The Development of a Neglected Child in the Family of Economics of Education?" Swedish Economic Policy Review 11,2 (2004): 183-226.

3.	van der Sluis, Justin van Praag, C. Mirjam van Witteloostuijn, A.
3.	Why Are the Returns to Education Higher for Entrepreneurs Than for Employees? Working Paper, Faculty of Economics and Business, University of Amsterdam, January 2006. Also: http://www1.fee.uva.nl/pp/bin/408fulltext.pdf Cohort(s): NLSY79 Publisher: Faculty of Economics and Business, University of Amsterdam Keyword(s): Earnings; Educational Returns; Entrepreneurship; Income; Locus of Control (see Rotter Scale); Rotter Scale (see Locus of Control); Self-Employed Workers; Variables, Instrumental Permission to reprint the abstract has not been received from the publisher. We compare the returns to education (RTE) for entrepreneurs and employees, based on 19 waves of the NLSY database. By using instrumental variable techniques (IV) and taking account of selectivity, we find that the RTE are significantly higher for entrepreneurs than for employees (18.3 percent and 9.9 percent, respectively). We perform various analyses in an attempt to explain the difference. We find (indirect) support for the argument that the higher RTE for entrepreneurs is due to fewer (organizational) constraints faced by entrepreneurs when optimizing the profitable employment of their education.
	Bibliography Citation van der Sluis, Justin, C. Mirjam van Praag and A. van Witteloostuijn. "Why Are the Returns to Education Higher for Entrepreneurs Than for Employees?." Working Paper, Faculty of Economics and Business, University of Amsterdam, January 2006.

4.	van der Sluis, Justin van Praag, C. Mirjam van Witteloostuijn, A.
4.	Why Are the Returns to Education Higher for Entrepreneurs than for Employees? IZA DP No. 3058, Institute for the Study of Labor, September 2007. Also: ftp://repec.iza.org/RePEc/Discussionpaper/dp3058.pdf Cohort(s): NLSY79 Publisher: Institute for the Study of Labor (IZA) Keyword(s): Earnings; Educational Returns; Entrepreneurship; Income; Locus of Control (see Rotter Scale); Rotter Scale (see Locus of Control); Self-Employed Workers; Variables, Instrumental Permission to reprint the abstract has not been received from the publisher. We compare the returns to education (RTE) for entrepreneurs and employees, based on 19 waves of the NLSY database. By using instrumental variable techniques (IV) and taking account of selectivity, we find that the RTE are significantly higher for entrepreneurs than for employees (14 per cent and 10 per cent, respectively). We perform various analyses in an attempt to explain the difference. We find (indirect) support for the argument that the higher RTE for entrepreneurs is due to fewer (organizational) constraints faced by entrepreneurs when optimizing the profitable employment of their education.
	Bibliography Citation van der Sluis, Justin, C. Mirjam van Praag and A. van Witteloostuijn. "Why Are the Returns to Education Higher for Entrepreneurs than for Employees?." IZA DP No. 3058, Institute for the Study of Labor, September 2007.

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