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Job Loss and Entrepreneurship

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  • Knut Røed
  • Jens Fredrik Skogstrøm

Abstract

type="main" xml:id="obes12042-abs-0001"> We examine the impact of job loss on entrepreneurship behaviour. Our identification strategy relies on the use of mass layoffs caused by bankruptcies as indicators of exogenous displacement. Building on Norwegian register data, we find that working in a company which is going to close down due to bankruptcy in the near future raises the subsequent entrepreneur propensity by 155% for men and 180% for women, compared to working in a stable firm. These estimates are much larger than previously reported in the literature. Taking into account that many workers lose their jobs in the comparison group of stable firms also, we suggest that the full effects of displacement are even larger.

Suggested Citation

  • Knut Røed & Jens Fredrik Skogstrøm, 2014. "Job Loss and Entrepreneurship," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(5), pages 727-744, October.
    • Handle: RePEc:bla:obuest:v:76:y:2014:i:5:p:727-744
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    File URL: http://hdl.handle.net/10.1111/obes.2014.76.issue-5
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    Cited by:

    1. Knut Røed & Jens Fredrik Skogstrøm, 2014. "Unemployment Insurance and Entrepreneurship," LABOUR, CEIS, vol. 28(4), pages 430-448, December.
    2. Joao Galindo da Fonseca, 2022. "Unemployment, Entrepreneurship and Firm Outcomes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 322-338, July.
    3. Kristina Nyström, 2020. "Entrepreneurship after displacement," Small Business Economics, Springer, vol. 54(2), pages 475-494, February.
    4. Arvid Raknerud & Marit Rønsen, 2014. "Why are there so few female entrepreneurs? An examination of gender differences in entrepreneurship using Norwegian registry data," Discussion Papers 790, Statistics Norway, Research Department.
    5. Niklas Engbom, 2019. "Firm and Worker Dynamics in an Aging Labor Market," Working Papers 756, Federal Reserve Bank of Minneapolis.
    6. Awaworyi Churchill, Sefa & Munyanyi, Musharavati Ephraim & Smyth, Russell & Trinh, Trong-Anh, 2021. "Early life shocks and entrepreneurship: Evidence from the Vietnam War," Journal of Business Research, Elsevier, vol. 124(C), pages 506-518.
    7. Nyström, Kristina, 2016. "Entrepreneurship after displacement: The transition and performance of entrepreneurial ventures created after displacement," Working Paper Series in Economics and Institutions of Innovation 443, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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