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Title:Does self-employment reduce unemployment? PDF Logo
Authors:Thurik, A. Roy
Carree, Martin A.
van Stel, André J.
Audretsch, David B.
Issue Date:2007
Series/Report no.:Jena economic research papers 2007,089
Abstract: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.
Subjects:entrepreneurship
self-employment
unemployment
JEL:J23
J64
L26
L53
M13
O11
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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