WHAT MAKES AN ENTREPRENEUR

This article uses various micro data sets to study entrepreneurship. C onsistent with the existence of capital constraints on potential entre preneurs, the estimates imply that the probability of self-employment depends positively upon whether the individual ever received an inheri tance or gift. When directly questioned in interview surveys, potentia l entrepreneurs say that raising capital is their principal problem. C onsistent with our theoretical model's predictions, the self-employed report higher levels of job and life satisfaction than employees. Chil dhood psychological test-scores, however, strongly correlated with lat er self-employment. For many commentators this is the era of the entre preneur. After years of neglect, those who start and manage their own businesses are viewed as popular heroes. They are seen as risk-takers and innovators who reject the relative security of employment in large organizations to create wealth and accumulate capital. Indeed, accord ing to many, economic recovery... is largely dependent upon their ambi tions and efforts.