Entrepreneurship and education in the Russian Federation

Abstract

Successful establishment of business requires certain abilities and skills, which can be generated with the higher level of education. In this paper, I estimate the effect of education on the probability of enterprise establishment in Russia using Longitudinal Monitoring Survey DataVerse between 2005-2016. However, one of the challenges was the endogeneity of education, which is the correlation of education with variables in the error term. I addressed this issue by using parental education as an Instrumental Variable for individual’s education. As a result, by using IVprobit estimation, I obtain that additional year of education compared to the average year of education increases the likelihood of business establishment by 0.58 percent on average.