COGNITIVE AND SOCIO-EMOTIONAL SKILLS OF FORMAL AND INFORMAL ENTREPREURS IN LATIN AMERICA

Paola Palacios, Universidad Icesi, Colombia
German Lambardi, Universidad Icesi, Colombia

Published in

JOURNAL OF INTERNATIONAL BUSINESS AND ECONOMICS
Volume 19, Issue 1, p35-46, March 2019

ABSTRACT

Despite considerable progress in terms of poverty reduction and social protection coverage in the last decades, Latin America is still a region characterized by high rates of poverty and inequality. Entrepreneurship promotion has been an important strategy adopted by many governments in the region to overcome these challenges. At the same time, a growing body of evidence has shown the importance of cognitive and non-cognitive skills for the decision to become self-employed. In this paper we study the role of cognitive and non-cognitive skills in the decision to become an entrepreneur for a sample of ten Latin American countries. To this end, we estimate separate logit models for all entrepreneurs, formal and informal entrepreneurs. Our main results indicate that socio-emotional skills have little influence on entrepreneurial activity, except for grit and openness to experience. Regarding cognitive skills, numeracy ability is positively associated to formal entrepreneurship and negatively associated to informal entrepreneurship. A public policy implication from this study is that increasing both the quality and quantity of education in Latin America may help foster formal entrepreneurial activity in the region.

Keywords

Entrepreneurship, Latin America, Cognitive skills, socio-emotional skills, informality.


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