Why do some people become entrepreneurs, how do institutions affect this choice, and how does this affect the firm size distribution and aggregate productivity? This paper addresses this question using a matching model with occupational choice and heterogeneity in both ability as a worker and ex...

Why do some people become entrepreneurs (and others don't)? Why are firms so heterogeneous, and many firms so small? To start, the paper briefly documents evidence from the empirical literature that the relationship between entrepreneurship and education is Ushaped; that many entrepreneurs start a...