Honkanen Virpi

Yrittäjiksi ryhtyneiden korkeakoulutettujen työssä menestyminen viidessä Euroopan maassa.

English Summary

This dissertation explores graduate entrepreneurs’ employment success in five European countries. I have analysed the differences and similarities in employment success between entrepreneurs and waged workers, along with intra-group differences, in Italy , Germany , the Netherlands , Finland and Norway . Taking Finnish graduates' success as entrepreneurs and employment conditions as a starting point, international comparisons help us to understand them more comprehensively. My research problem was formulated as follows: How have graduate entrepreneurs succeeded in the labour market in the countries under comparison? My first research question is to what extent graduates have become entrepreneurs in five European countries. Secondly, I ask if there are differences between entrepreneurs’ and waged workers' earnings, and how their income varies according to country, professional status and gender. Thirdly, I study the differences between entrepreneurs’ and waged workers’ employment success according to country, and how their degree programme, type of qualification, social background, social relationships and gender affect their success.


I have decided not to treat individuals as status seekers or like as rational economic actors, as is often done in the field of economics. Graduates’ success is studied from a perspective that emphasizes the significance of the selection mechanisms in the transitions from school to work. I understand the higher education systems and the labour market as fields where the actors operate according to their opportunities and limits. The fields serve as arenas where actors fight for resources. Individuals, institutions and others alike operate to raise such capital that are necessary or useful in the field. (Bourdieu 1986.) Changing relations between education and the labour market are analysed from the perspectives of the theory of human capital, the concept of credentials, and Bourdieuesque theory of social capital.


The empirical study is based on a comparative database titled REFLEX. Collected through a cross-European written questionnaire on the relationships between higher education and employment in 16 countries, the database incorporates the views of 70,000 graduates. For each country under comparison, a representative sample has been drawn of graduates who gained their degree in the academic year 1999/2000. The data were collected in 2005, some five or six years after graduation. Graduates from various institutions of higher education answered questions on educational experiences before and during higher education, their transition to the labour market, the characteristics of their occupational and labour market career up to present, and socio-biographic background, along with work orientations and values. My data include only the 11,000 graduates who were in paid employment at the time of the survey. The measures for employment success are grouped into objective and subjective measures. The indicator of the objective success is total gross monthly earnings. The variables included in the subjective indicator are the employment values important to graduates personally. Respondents were asked about the following values: work autonomy, job security, the opportunity to learn new things, new challenges, career prospects, time for leisure activities, social status, change of doing something useful for society and good change to combine work with family life. How graduates have succeeded in their work not only tells about their employability, but also more widely about their possibilities to find both rewarding and meaningful jobs in the labour market.


I connected the variables that measured the value aspects of work into one indicator with the help of the sum variable method. After that I constructed the typology of employment success from the objective and the subjective indicators. According to the typology, graduates are divided into three groups: unsatisfied low salaried, moderately successful (they have high salaries but unsatisfying jobs or low salaries but satisfying jobs), and satisfied high salaried. I used this typology because I wanted to draw out of data both those who earn well and those who are satisfied with their jobs. On the basis of this type classification, ca. 50% belong to the moderately successful category, and one third to the category satisfied high salaried. One in every five respondents belongs to the ‘loser’ category with low salaries and unsatisfied jobs. This result indicates that graduates still have relatively good chances of being placed in what could be called ‘good’ jobs. On the other hand, it tells that higher education does not necessarily open the door to success in the labour market.


Cross tabulations and binary logistic regression models are used to analyse factors that explain employment success. The regression models’ predictive success and significance is estimated with the help of the classification tables and the goodness-of-fit test for survey data (Hosmer and Lemenshow test). The first regression model includes variables predicting employment success in each country separately, the second model variables predicting both entrepreneurs' and waged workers’ employment success, and the third model separate variables that predict both women's and men’s employment success. Models four to six describe employment success according to the fields of education.


I summarise the main results as follows: The shares of graduate entrepreneurs vary according to country. In Italy , nearly a quarter of graduates has started a business after graduation. In Germany 13 per cent have become self-employed. The Dutch, Finnish and Norwegian entrepreneurs' shares are distinctly lower than in the two aforementioned countries. Out of the Dutch and the Finns, seven per cent have become self-employed, and sis per cent of the Norwegians. Also the graduates’ income varies according to professional status, gender and country. First, in the Netherlands and especially in Germany , waged workers earn more than entrepreneurs. In Norway , entrepreneurs enjoy considerably better earnings than waged workers according to arithmetical averages. In Finland and Italy , there are no differences between the entrepreneurs' and the waged workers' incomes. However, the income level of the Italians is lower in comparison with other European countries. Second, the dispersion of the entrepreneurs' income is greater than that of the waged workers' in most countries. Third, women earn considerably less than men. In the Netherlands , Finland and Italy , the order on the basis of the income level is the following: entrepreneur women, waged worker women, entrepreneur men and waged worker men. The entrepreneur women's income level is the lowest, the waged worker men’s the highest. In Norway , the order is nearly the same, but the waged workerslosein comparison to the entrepreneurs. In Germany , both entrepreneur women’s and men’s income levels are lower than those enjoyed by both female and male waged workers.  In Norway , the Netherlands and Finland , income dispersion between entrepreneur men and entrepreneur women is greater than between the waged worker men and women; in Germany and Italy the situation is the opposite.


Entrepreneurs' employment success can be explained mainly by country, the field of education, working hours, education level and gender. The most impressive factor is country. Waged workers’ employment success can be explained by working hours, education level, field of education, gender and country. Full-time workers have a better probability for success both as entrepreneurs and waged workers as compared with part-time workers. Men have better opportunities for success both as waged workers and entrepreneurs than women. Among men, professional status affects employment success. Waged worker men have better possibilities for employment success compared with the entrepreneur men. Among women, on the other hand, the status does not have influence on the possibilities of the success.


The level of education is connected with becoming an entrepreneur. Out of those graduates who graduated from long degree programmes providing direct access to the doctorate (i.e. master’s degree), 15 per cent are self-employed. On the other hand out of those who graduated from long degree programmes not providing direct access to the doctorate (bachelor's degree), only six per cent have become self-employed. There is also a connection between the education level and employment success. A master’s degree leads to employment success more probably than the bachelor’s degree in the Netherlands , Finland and Norway . The master’s degree has been useful for both entrepreneurs and waged workers. Thus, the human capital theory operates in practice. Education develops skills, knowledge and abilities needed in the labour market. In other words, it improves the individual’s economic capability and employability. However, the theory cannot explain why gender, social background or other individual factors affect the school-to-work transitions or employment success.


The human capital theory cannot tell why graduates from the same level and field of education do not have similar possibilities for success. Gender is a powerful factor affecting employment success. As my frame of reference anticipates, the most suitable individuals are recruited to the labour market. From the point of view of employment success opportunities, the suitable individual is a man who has graduated with a higher academic degree and from certain fields. In certain fields (particularly engineering, social sciences and natural sciences), men who have bachelor’s degrees still have better chances of succeeding than women who have graduated from the same field but with a higher degree. Human capital theory does not explain why every fifth has ended up in unsatisfied low-salaried jobs despite their education. Particularly, training in the field of the humanities and arts, or agriculture, forestry and veterinary sciences could be described with the concept of the human risk capital (see Kivinen & Ahola 1999). In these particular fields, graduates have unlikely chances for success as compared with the other fields.


The concept of credentials describes a few fields of education well. These fields include law as well as health and welfare. All graduates in the field of law have a Master’s degree. It seems that there is no seriously taken lower track, and both men and women have good opportunities for success as waged workers. In the fields of health and welfare, the higher track is more likely to lead both men and women for employment success than the lower track. The aforementioned two fields have been able to retain high status of their respective profession. Those who have a health and welfare master’s have also by and large succeeded as entrepreneurs. These credentials are significant in Germany , the Netherlands and Norway in the sense that there is a connection between the grades and employment success. Graduates who have received above-average grades succeed more probably than others.


Social background and relationships have significance on employment success, but the effects of these underlying factors are not strong. A slightly greater share of graduates from highly-educated families has become entrepreneurs as compared with waged worker’s, particularly in Finland and the Netherlands . On the other hand, fewer graduates whose parents only have a basic level of education have ended up as entrepreneurs. On the basis of this observation, we can suppose that the factors interfacing with the cultural, economic and social capital of the family help the graduate become an entrepreneur. In addition, more entrepreneurs have estimated that social relations are useful if they need information on job opportunities or if they need help in setting up their businesses. Social relations are also meaningful to employment success. There is a connection between employment success and obtained information on job opportunities among the Italian, Dutch and Finnish waged workers and German and Dutch entrepreneurs. The usefulness of the help needed in setting up a business is connected to the Italian, Dutch, Finnish and Norwegian waged workers’ employment success, but as concerns entrepreneurs, it only affects the Germans’ success. On the basis of these results, it seems that social relations have been beneficial for those who have started a business, but social background and relationships do not necessarily enable entrepreneurs to succeed in the same way as the waged workers. Social background also affects graduates’ incomes, but not the meaningfulness of work. In other words, the offspring of the highly educated have better opportunities for higher incomes as compared with others. Indeed, according to the general results of the Reflex project, the graduates’ social background exercises its influence mainly indirectly, by the offspring of graduates entering higher education in the first place and by choosing particular fields of study, levels of degrees or academically prestigious programmes (van der Velden & Allen 2007, 53).


A result that should be emphasised is that entrepreneurship does not produce similar opportunities for success in every country. The success of entrepreneurs is most clearly explained by country. In Italy , as well as Germany , graduates have become entrepreneurs more commonly, but their opportunities for success are smaller as compared with entrepreneurs from other countries. Only in Norway entrepreneurs have more opportunities for success as compared with waged workers and with other countries’ self-employed graduates. In addition, as different capitals are generally needed (economic, social and cultural) in entrepreneurship, the preconditions for self-employment vary according to country. Thus, entrepreneurship should be explained differently in each country. (Lohman & Luber 2004.) Entrepreneurship does not manifest itself according to one ‘universal’ model. Cultural and other differences between countries produce different kinds of opportunities for the self-employed. Explanations could be searched from the following factors, for example: the South-North distortion, the standards of living, the economic situation, the characteristics of the labour market, working models, the characteristics of training systems, different routes from education to the world of the work, country-specific traditions, resources and the societies’ social dynamics.


From this study there rise some interesting topics for further study. The first question is whether graduate entrepreneurs have been more successful than entrepreneurs with other levels of qualifications both nationally and internationally. Do the graduates benefit from their education in the field of entrepreneurship? Secondly, also the characteristics graduate entrepreneurship should be studied more comprehensively in spite of the already existing studies. For example, the duration and the nature of entrepreneurial work would be a challenging subject of study. It is relatively easy to set up the shop, but the continuity and success of the activity are more complex questions. Thirdly, the fact that the satisfied high salaried women’s shares are considerably smaller than those of the men evokes many questions. It is clear that gender itself does not affect the labour market success of individuals. The results of my work tell about the fact that men have a better probability to succeed in the labour market. The results do not tell why this is the case, however. In order to answer this question, we should analyse the general social mechanisms that produce the perceived differences in employment success between men and women (Hedström & Swedberg 1996, 289).


I hope that my study will open new vistas to the relations between higher education and society. The significance of the study is, at best, that it could evoke wider social discussion about the relations between education, entrepreneurship and the labour market.