Essays on Economics of Entrepreneurship

This dissertation examines three important issues. The first issue is about the human capital investment and entrepreneurship as a career choice. The standard human capital theory shows that firms (employees) never invest in general (firm-specific) human capital of the employee as they do not extract any return from it. However, when entrepreneurship is introduced as a career option for an innovative employee, both firm’s and employee’s human capital investments change. Employee starts investing in his firm-specific human capital to increase the probability to innovate (and to become an entrepreneur). However, the firm uses general human capital investment to reduce the risk of employee’s departure. The second issue is regarding the factors motivating entry regulations reforms and the possible nonlinear effects of entry regulation reforms. The current literature and the policy recommendations assume that these reforms have linear effects on entrepreneurship. Nevertheless, the anecdotal evidence shows that the outcomes of such reforms vary greatly from country to country. To investigate this issue, I collect a sample data on entry regulations and firm creation from World Bank. The empirical analysis indicates that the effect of entry regulation reforms depends on the pre-reform level of bureaucracy in the country. More specifically, while low-bureaucracy countries benefit from entry regulation reforms, high-bureaucracy countries do not benefit. Moreover, the probability of making a reform increases if the country has reformist neighbors, cumbersome entry regulations, high unemployment rate, or low corruption level. The last issue is related to the individual and joint effects of bureaucracy and corruption on different types of entrepreneurs. The current literature investigates these effects only on unified measures of entrepreneurship. However, entrepreneurs are very different in many senses. To address this issue, I collect the necessity-based and opportunity-based entrepreneurship data from Global Entrepreneurship Monitor. The empirical analysis yield two important results: First, bureaucracy has a direct negative (positive) effect on necessity-based (opportunity-based) entrepreneurs. Second, corruption mitigates the effect of bureaucracy for both groups of entrepreneurs. All three chapters offer useful insights and important implications to academics and policymakers.

Immigrant Earnings : Age at Immigration Matters (Working Paper 20)

A correlation between age at immigration and earnings is observed in Canadian census data. The evidence supports three underlying sources of the effect; first, work experience in the source country yields virtually no return in the host country; second, the return to education varies with age at immigration, and, finally, an “acculturation” effect is observed for immigrants who are visible minorities or whose mother tongue is not English. Further, it is found that educational attainment, and relatedly earnings, vary systematically across age at immigration with those arriving around age 15 to 18 obtaining fewer years of education. JEL codes: J61, J31.