The Power of Skills: Unleashing Entrepreneurial Potential through Vocational Education

Abstract The paper investigates the role of vocational education in the decision to become an entrepreneur. Little is known about how cognitive and non-cognitive skills, as well as vocational education, shape transitions into entrepreneurship. Using data from the Transition from Education to Employment (TREE) study in Switzerland, I examine the role of skills in the decision to become an entrepreneur. I developed a dynamic choice model in which the decision to become an entrepreneur depends on unobserved individual types, education, prior work experience, cognitive and non-cognitive skills, and other individual characteristics. Parameter estimates indicate that the main deterrents to becoming an entrepreneur are cognitive skills in STEM fields (math and science) and the ability to diversify acquired skills. Additionally, a policy simulation study explores the potential effects of various educational and training interventions on entrepreneurship and employment outcomes. The findings highlight the importance of targeted policies in fostering entrepreneurial activities and improving employment prospects. JEL codes: J24, I26, L26