Education, social identity and self-employment over time: evidence from a developing country

Abstract

While the extant literature suggests that an individual’s occupational choice depends on the level of economic development, little is known about how the dynamics of education and social identity impact self-employment choice over time in a developing country setting. The pseudo-panel regression results presented here suggest that higher education decreases the likelihood of individuals’ choice of self-employment over time in India, but increases it in most developed cohorts. Such transitional dynamics are more prominent amongst individuals who belong to historically determined backward classes. Furthermore, the results suggest sectoral differences in self-employment choice—individuals with higher education and wealth have a greater likelihood of transiting into self-employment over time in agriculture while similar individuals in non-agriculture exit self-employment. In both sectors, however, education moderates the impact of social identity on self-employment choice. The paper underscores the need for policy shifts towards entrepreneurship along the path of economic development.

Has the Integrated Medical Insurance System promoted return-to-hometown entrepreneurship among migrant workers? Evidence from China

“…Conversely, for those with higher education, the effect of IMIS is positive but not statistically significant. This suggests that migrant workers with comparatively lower educational attainment are more inclined to return to their hometowns for entrepreneurship following the implementation of IMIS, consistent with the findings of Tamvada et al (67).…”

Characteristics, Determinants, Challenges and Performance of Self-employment among the Youth in Uganda

“…Similar results of a positive effect of education on self-employment are reported by (Blanchflower, 2000;Blanchflower and Meyer,1994;Taylor, 1996). However, the results contradict those of (Blanchflower et al, 2001;Livanos, 2009;Tamvada et al, 2022;Van der Sluis et al, 2005), who found that education reduces the likelihood of engaging in self-employment. The results of primary education's effect on self-employment are closely similar to those of (Evans and Leighton, 1989;Johansson, 2000), who reported that education has no significant effect on the probability of self-employment.…”

“…This may indicate a negative impact of education on self-employment. In agreement, (Blanchflower et al, 2001;Livanos, 2009;Tamvada et al, 2022) found that education reduces the likelihood of self-employment. Also, Van der Sluis et al (2005) concur that more educated individuals engage in paid employment.…”

“…The literature is not conclusive, focusing on the impact of education on self-employment. Tamvada (2010) points out that education expands an individual's knowledge base and increases exposure to new opportunities, but it also increases the opportunity cost of selfemployment. As per capita income grows, the return from salaried/ paid employment increases faster than from entrepreneurship (Lucas, 1978).…”