Abstract

The study analyzes graduates’ human capital (HC) endowments and their decision to opt for self-employment. We argue that graduates with high levels of HC are offered various options (outside) besides becoming an entrepreneur. Prior research has suggested that the relationships between human capital and entrepreneurial outcomes as well as HC and the probability to engage in entrepreneurial activity are more or less linear. We argue that graduates with high levels of human capital are offered various options (outside) on the labor market besides becoming an entrepreneur. In this sense we account for the effects of education and experience on graduates’ labor market options (increasing graduates’ entrepreneurial opportunity costs) and propose a curvilinear (inverted u-shape) relationship between HC investments and the probability to engage in entrepreneurship.

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