Running in the family: parental role models in entrepreneurship

Whether preferences for entrepreneurship or entrepreneurial human capital are transmitted from parents to children via observing and interacting with the parents can be difficult to discern. However, in the current literature, the human-capital channel refers to the specific skills that are acquired by working/participating in the activities of the parents’ firm, whereas the values, ideas, tricks, etc., communicated through daily interaction belong to the preference channel and is interpreted as a role-model effect. If we instead choose to define human capital more broadly as all accumulated experience since birth, the human-capital channel should also include social-learning effects. Under this interpretation of the human-capital channel, the hypotheses above cannot discriminate between the human-capital and the preference channel, but the hypotheses then point to a neglected aspect of the standard human-capital model, namely gender-specific effects in the intergenerational transfer of human capital. Furthermore, if children work for their parents without being formally employed by these, we will not be able to distinguish the effects of this from the effects working through the preference channel.

In the estimations below, we rely on a more flexible specification of schooling, using both Years of schooling and dummies for nine different categories of education programmes based on length and type.