Seminar Vol. 155

Title: Do Elite Colleges Matter? Its Implications for Entrepreneurship Decision and Dynamics

Speaker: Naijia Guo, The Chinese University of Hong Kong

Time: May 13th, 2019 13:30–15:00

Venue: Conference Room 106B, Zhonghui Building (IESR, JNU College of Economics)

About the speaker:

Naijia Guo is an Assistant Professor at the Department of Economics, The Chinese University of Hong Kong. She received a Ph.D. degree in Economics from the University of Pennsylvania in 2014. Naijia Guo’s research interests are Labor Economics, Family Economics, Development Economics, and Health Economics.

Abstract:

This paper studies the effect of elite colleges on entrepreneurial decision and dynamics. We build a life-cycle model with dynamic decisions of education and career choices. It captures the stylized facts from the Panel Study of Income Dynamics (PSID) that elite college enrollment and entrepreneurship (owning an incorporated business) are positively correlated, but that between elite college enrollment and other self-employment (owning an unincorporated business) are not. Self-selection due to the difference in abilities and financial constraints are vital to understanding the education and subsequent career choices. Our structural estimation shows that elite colleges provide much more significant human capital gain than non-elite colleges for employees, entrepreneurs and other self-employed. Shutting down the option of elite colleges reduces the number of entrepreneurs, but has little impact on other self-employed. Providing subsidies to elite colleges is more efficient than giving grants to non-elite colleges in terms of increasing the number of entrepreneurs and their income, increasing entry into and duration of entrepreneurship, and improving welfare.