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Start-up incentives: Entrepreneurship policy or active labour market programme?

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Author Info

  • Román, Concepción
  • Congregado, Emilio
  • Millán, José María

Abstract

As several European governments develop new start-up programmes during recessions, the appropriateness of these policies recently has become a hot policy issue. This study suggests that the contribution of these incentives is dubious, if aimed to combat economic and jobs crises as part of the entrepreneurship policy, and can be shaped by various country-specific factors, such as the economic situation and the stringency of labour laws. To provide support for these claims, this paper investigates the underlying determinants of an individual's decision to switch from unemployment to self-employment in Europe and stresses the need to devote special attention to the role of three essential dimensions: (i) the existing heterogeneity within self-employment, by considering self-employed individuals who hire employees (employers) and self-employed individuals without personnel (own-account workers) as separated groups; (ii) the effects of different measures of social capital and network contacts, as forms of micro level institutional factors; and (iii) the explanatory power of cross-country differences in the state of the economy, expenditure on start-up incentives, and the stringency of labour laws, as forms of macro level institutional factors. This study has useful theory and policy implications for entrepreneurship development.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Business Venturing.

Volume (Year): 28 (2013)
Issue (Month): 1 ()
Pages: 151-175

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Handle: RePEc:eee:jbvent:v:28:y:2013:i:1:p:151-175

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Web page: http://www.elsevier.com/locate/jbusvent

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Keywords: Start-up process; Social capital; Business cycles; Labour market institutions; Europe;

References

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Cited by:
  1. Fritsch, Michael & Kritikos, Alexander S. & Pijnenburg, Katharina, 2013. "Business Cycles, Unemployment and Entrepreneurial Entry: Evidence from Germany," IZA Discussion Papers 7852, Institute for the Study of Labor (IZA).
  2. Escudero, Veronica, 2014. "Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison," MPRA Paper 55319, University Library of Munich, Germany.
  3. Millán, José María & Congregado, Emilio & Román, Concepción, 2010. "Determinants of Self-Employment Dynamics and their Implications on Entrepreneurial Policy Effectiveness," REVISTA LECTURAS DE ECONOMÍA, UNIVERSIDAD DE ANTIOQUIA - CIE.
  4. Emilio Congregado & José María Millán & Concepción Román, 2014. "The emergence of new entrepreneurs in Europe," Economie Internationale, CEPII research center, CEPII research center, issue 138, pages 28–48.
  5. Jose Maria Millan & Emilio Congregado & Concepcion Roman & Mirjam van Praag & Andre van Stel, 2011. "The Value of an Educated Population for an Individual's Entrepreneurship Success," Tinbergen Institute Discussion Papers 11-066/3, Tinbergen Institute, revised 06 May 2014.
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