Entrepreneurial Human Capital and Firm Dynamics

45 Pages Posted: 16 Dec 2018 Last revised: 22 Jul 2021

See all articles by Francisco Queiro

Francisco Queiro

Nova School of Business and Economics

Date Written: February 7, 2021

Abstract

This paper shows that entrepreneurial human capital is a key driver of firm dynamics using administrative panel data on the universe of firms and workers in Portugal. Firms started by more educated entrepreneurs are larger at entry and exhibit higher life cycle growth. Consistent with an effect on growth, the thickness of the right tail of the size distribution increases with entrepreneur schooling. The evidence points to several underlying mechanisms, with technology adoption playing the most important part. I develop and estimate a model of firm dynamics that can parsimoniously account for these findings, and use it to draw aggregate implications. Accounting for the effect of entrepreneurial human capital on firm dynamics can substantially increase aggregate returns to schooling and the fraction of cross-country income differences explained by human and physical capital.

Keywords: Entrepreneurship, Human Capital, Firm Dynamics, Productivity

JEL Classification: I2, L2, O4

Suggested Citation

Queiro, Francisco, Entrepreneurial Human Capital and Firm Dynamics (February 7, 2021). Available at SSRN: https://ssrn.com/abstract=3280925 or http://dx.doi.org/10.2139/ssrn.3280925

Francisco Queiro (Contact Author)

Nova School of Business and Economics ( email )

Lisbon, 1099-085
Portugal

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