On the Origins of Entrepreneurship: Evidence from Sibling Correlations

57 Pages Posted: 31 Oct 2016 Last revised: 28 Apr 2023

See all articles by Matthew J. Lindquist

Matthew J. Lindquist

Stockholm University - Swedish Institute for Social Research (SOFI)

Joeri Sol

University of Amsterdam

Mirjam van Praag

University of Amsterdam - Department of Economics; Copenhagen Business School; Tinbergen Institute; IZA Institute of Labor Economics

Theodor Vladasel

Universitat Pompeu Fabra; Barcelona School of Economics

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Abstract

Promoting entrepreneurship has become an increasingly important part of the policy agenda in many countries. The success of such policies, however, rests in part on the assumption that entrepreneurship outcomes are not fully determined at a young age by factors that are unrelated to current policy. We test this assumption and assess the importance of family background and neighborhood effects as determinants of entrepreneurship, by estimating sibling correlations in entrepreneurship. We find that between 20 and 50 percent of the variance in different entrepreneurial outcomes is explained by factors that siblings share (i.e., family background and neighborhood effects).The average is 28 percent. Hence, entrepreneurship is far less than fully determined at a young age. Our estimates increase only a little when allowing for differential treatment within families by gender and birth order. We then investigate a comprehensive set of mechanisms that explain sibling similarities. Parental entrepreneurship plays a large role in explaining sibling similarities, as do shared genes. We show that neighborhood effects matter, but are rather small, particularly when compared with the overall importance of family factors. Sibling peer effects, and parental income and education matter even less.

Keywords: sibling correlations, entrepreneurship, occupational choice, family background, intergenerational persistence, neighborhood effects

JEL Classification: D13, J62, L26

Suggested Citation

Lindquist, Matthew J. and Sol, Joeri and van Praag, Mirjam and van Praag, Mirjam and Vladasel, Theodor, On the Origins of Entrepreneurship: Evidence from Sibling Correlations. IZA Discussion Paper No. 10278, Available at SSRN: https://ssrn.com/abstract=2861023 or http://dx.doi.org/10.2139/ssrn.2861023

Matthew J. Lindquist (Contact Author)

Stockholm University - Swedish Institute for Social Research (SOFI) ( email )

Kyrkgatan 43B
SE-106 91 Stockholm
Sweden

Joeri Sol

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018WB
Netherlands

Mirjam Van Praag

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4096 (Phone)
+31 20 525 4182 (Fax)

Copenhagen Business School ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Tinbergen Institute

Gustav Mahlerlaan
Amsterdam
Netherlands

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Theodor Vladasel

Universitat Pompeu Fabra ( email )

Barcelona
Spain

Barcelona School of Economics ( email )

Carrer de Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

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