Does self-employment reduce unemployment?

Arbeitspapier

This paper investigates the dynamic relationship between self-employment and unem-ployment rates. On the one hand, high unemployment rates may lead to start-up activity of self-employed individuals (the “refugee” effect). On the other hand, higher rates of self-employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods (the “entrepreneurial” effect). This paper introduces a new two-equation vector autoregression model capable of reconciling these ambiguities and es-timates it for data from 23 OECD countries between 1974 and 2002. The empirical re-sults confirm the existence of two distinct relationships between unemployment and self-employment: the “refugee” and “entrepreneurial” effects. We also find that the “entrepre-neurial” effects are considerably stronger than the “refugee” effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Jena Economic Research Papers ; No. 2007,089

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Unemployment: Models, Duration, Incidence, and Job Search ; Entrepreneurship ; Enterprise Policy ; New Firms; Startups ; Macroeconomic Analyses of Economic Development
• Subject: entrepreneurship ; self-employment ; unemployment ; Selbstständige ; Beschäftigungseffekt ; Arbeitslosigkeit ; VAR-Modell ; OECD-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Thurik, A. Roy ; Carree, Martin A. ; van Stel, André J. ; Audretsch, David B.
• Event: Veröffentlichung
• (who): Friedrich Schiller University Jena and Max Planck Institute of Economics
• (where): Jena
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/25654
• Last update: 10.03.2025, 11:44 AM CET