ess pro,.table is entrepreneurship relatively to becoming a worker. B ecause
ofthe hypothesis according to which progenitors’ entrepreneurial technical
ire¢ ciency is Uniformydistributed on (0; 1), theperaentαgecfncn-cμaii...ed
progenitors who decide to become entrepreneurs is venq. Ecuivarlently the
peιτentαgecfncn-c∣uali...edprcgenito∣∙s beccmingworkers is 1 ∣ Pe;nq:
A nalogously, it is easy to demonstrate that a cuali.ed agent.nds it
pro.table to become entrepreneur if and only if he is characterized by a
degree cfinetdency owerorecuial to the cu∣ali...ed threshold level veq =
_ > 0 ∙ °>e;q ∙ 1 for . h ∙ qK ∙ ix+w+±h ’
qK(1+h)-ix-(w+±h) ; with pe;q = 1 forqK> iχ + w+±h ^ .
qK > °eq = 0 for qK < ix+W+±h
e;q ɪ 1+ h
A Isointhiscasethethreshold evelcfinetdencyisadecreasingfUincticn
ofthe interest rate and ofthe input recuirement, while it is an increasing
fUncticn cf the diπ erence between the gross return from education fOrentre-
preneurs qKh amdthegross return from education forwcrkers (±h).
T he cu∣ali...ed threshold degree of inetciency is higher than the non-
cuali.ed threshold level. A ctually, ifan individualis non-cuali.ed, he be-
ccmes entrepreneurifhis degreeofinet ciency is Cwerthan Pe;nq ; education
implies an increaseinwageecual tctheco>legepremium ±h; whichwculd de-
crease entrepreneurialpro.tability. A nyway education increases also pro.t,
and the pro..tenhancementqKh is Cjreateirthan wage enhancement ±h. In
otherwords thegross return from human capitalinvestmentis higherforen-
trepreneurs than fcrwcrkers. T Hhenetea ectcfeducaticn is thereforeahigher
pro.tability ofundertaking the entrepreneurial investment. T he threshold
degree ofinet ciency is therefore higherfCreducated agents. Fcrmaily
t,e^ i °e;nq
qK i ± h
qK
>0
(4)
A pcoragents whccannctap ord human capital investmentmay...nd itprof-
itable tcundertake the investmentprcject, buthe has tcbe naturally mcre
et cientthan a rich/c∣uali...ed agent.
Sinceweailth and technical inetciency a∣restcohastica∣ly independent;
the percentage cfcu∣aii...ed workers among progenitors is (1 i h) Pe;q: N on-
c∣uali...ed entrepreneurs are instead the h°e;nq percent. T he percentage of
c∣uali...ed workers is (1 i h)(1 i Pe;q) and ...naly ncn-cu∣alι...ecl workers are
the h (1 i Pe;nq) percentofprogenitcrs.
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