Max Planck Institute for Innovation and Competition, Munich, Room 313
Family background matters for entrepreneurship; however, the focus on factors making siblings similar rather than different may hide important sources of heterogeneity and understate the total importance of families. In a set of causal exercises using Swedish register data, I assess the differential effects of birth order, family size, and sibling sex composition on entrepreneurship. These factors appear to have a negligible impact. While later born men are more likely to become unincorporated entrepreneurs, this effect is largely explained by their lower education, pointing towards the subsistence nature of this type of entrepreneurship. I find no evidence of causal family size effects in linear and non-linear instrumental variable approaches, although there is a small negative effect of having a brother on the father-daughter association in unincorporated entrepreneurship. Finally, neither source of within-family heterogeneity exhibits a clear relationship with incorporated entrepreneurship. The results are consistent with the absence of adult sibling peer effects in entrepreneurship and confirm the role of families in generating sibling similarities, not differences. The importance of family background for entrepreneurship is therefore only marginally understated, and accounting for within-family differences increases previously estimated sibling correlations by little.
Contact Person: Laura Rosendahl Huber, Ph.D.