Cho, In Soo; Orazem, Peter

WP #13001, January 2013

In Lazear (2005)’s model of entrepreneurship, individuals with more diverse academic and occupational training are more likely to become entrepreneurs, while more narrowly trained individuals become employees. We examine whether Lazear’s model can also explain which individuals become nonprofit entrepreneurs. Information on successive cohorts of college graduates from a single university from 1982-2006 show that observed diversity of academic and occupational skills increases the probability of nonprofit sector entrepreneurship, consistent with previous findings of for-profit entrepreneurs. In addition, unobservable talents that increase probability of for-profit start-ups are positively correlated with the unobservable skills that lead to nonprofit start-ups, consistent with a presumed entrepreneurial skill that underlies the Lazear’s Jacks-of-All-Trades model.

JEL Classification: L26, L31, M5

Keywords: Entrepreneurship, Non-profit, Jacks-of-All-Trades theory, Balanced skills

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