DP12312-3 | Are They All Like Bill, Mark, and Steve? The Education Premium for Entrepreneurs

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We calculate the average yearly income obtained by entrepreneurs during their venture using the Survey of Consumer Finances since the late 1980s. We find that the premium for postgraduate education has increased substantially more for entrepreneurs than for employees. Today an entrepreneur with a postgraduate degree earns on average \$100,000 a year more than one with a college degree. The difference more than doubles at the higher quantiles of the income distribution. In the late 1980s, differences were close to zero. The rise in the postgraduate premium is mainly due to increased complementarity between higher education and past experience.