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Investment in Entrepreneurial Ability

Theodore W. Schultz
The Scandinavian Journal of Economics
Vol. 82, No. 4 (1980), pp. 437-448
Published by: Wiley on behalf of The Scandinavian Journal of Economics
DOI: 10.2307/3439676
Stable URL: http://www.jstor.org/stable/3439676
Page Count: 12
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Investment in Entrepreneurial Ability
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Abstract

Entrepreneurship is a pervasive activity in a dynamic economy. A wide array of people at various points over the life cycle are entrepreneurs, not only bureaucrats and farmers but also laborers, students, housewives and consumers are entrepreneurs. Entrepreneurial returns are a significant source of income in a dynamic economy. The economic value of the entrepreneurial ability that is acquired by education can be identified and measured. Whereas conceptually every entrepreneurial action entails some risk, risk is not a unique attribute of a dynamic economy. The idea that the economic value of what entrepreneurs do is to be equated as a return for risk bearing, is rejected. This investment approach to entrepreneurial ability implies that the returns that actually occur to education are substantially undervalued.

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