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family member are not simply capturing the effects of management experience or specific

business human capital on small business outcomes. Instead, prior work experience in a

family member's business has an independent effect on small business outcomes, which

may in part be due to the acquisition of less specific, general business human capital.

MISSING DATA

A concern with the estimates reported in Table 2 is the amount of missing data for

some of the independent variables in the CBO. Approximately 10 percent of the

observations for each of the specifications reported in Table 3 are excluded because of

missing values for one or more of the independent variables. Although these levels of

missing data are not extremely high, we examine the sensitivity of our results to two

alternative methods of correcting for missing data. First, we estimate regressions in

which dummy variables are included for missing values of specific independent

variables.18 For example, if the education level of the business owner is missing then the

four education level dummy variables would be equal to zero and a special missing

education dummy variable would be equal to one. Thus, the missing observation for

owner's education would not contribute to the coefficient estimates on the main education

level dummies, but would contribute to coefficient estimates on other variables. This

technique is becoming increasingly common in the literature because it is easy to

implement and allows for an increase in the efficiency of some coefficient estimates.

Although not reported, we find estimates that are similar to the ones reported in Table 2

for all four specifications.

18 Race, gender, region, and urban are from administrative record data and have no missing values.

16

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