with a theory of EHC accumulation. I also exploit the exogenous nature of the occupational shock to provide causal evidence for an economically-significant value of entrepreneurial experience. Secondly, I develop a full dynamic theory of EHC accumulation through learning-by-doing. The theory explains the bifurcation between subsistence entrepreneurs, who get caught in an EHC poverty trap, and opportunity-oriented entrepreneurs. I test the model with panel data techniques. Together the results provide complementary support for the concept of EHC and its importance for entrepreneurial dynamics. The results suggest that policymakers who intend to stimulate entrepreneurial activity should be put less of a focus on financing provision for low-skill individuals, and give greater attention to individuals with high entrepreneurial potential, particularly early in their careers. © 2012 Russell Toth ALL RIGHTS RESERVED