Does self-employment reduce unemployment?

Arbeitspapier

This paper investigates the dynamic interrelationship between self-employment and unemployment rates. On the one hand, unemployment rates may stimulate start-up activity of self-employed. On the other hand, higher rates of self-employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods. These two effects have resulted in considerable ambiguities about the interrelationship between unemployment and entrepreneurial activity. This paper introduces a two-equation vector autoregression model capable of reconciling these ambiguities and tests it for data of 23 OECD countries over the period 1974-2002. The empirical results confirm the two distinct relationships between unemploy-ment and self-employment, i.e. "refugee" and "entrepreneurial" effects. We also find that the "entrepreneu-rial" effects are considerably stronger than the "refugee" effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Papers on Entrepreneurship, Growth and Public Policy ; No. 0705

Classification and Topics

• Classification: Wirtschaft ; New Firms; Startups ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Subject: entrepreneurship ; Gibrat's Law ; self-employment ; unemployment ; Selbstständige ; Beschäftigungseffekt ; Arbeitslosigkeit ; VAR-Modell ; OECD-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Audretsch, David B. ; Carree, Martin A. ; van Stel, André J. ; Thurik, A. Roy
• Event: Veröffentlichung
• (who): Max Planck Institute for Research into Economic Systems
• (where): Jena
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/19998
• Last update: 10.03.2025, 11:44 AM CET