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Displacement and self-employment entry

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  • von Greiff, Jenny
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    Abstract

    Displacement is expected to decrease the reservation wage of self-employment by decreasing earnings in paid employment and increasing the probability of unemployment. This paper examines whether displacement increases the probability of self-employment using propensity score matching on Swedish register-based data. The data include all individuals displaced due to plant closures in 1987 and 1988, and a random sample of 200,000 employed individuals. The results suggest that displacement almost doubles the probability of entering self-employment the year after displacement. A sub-sample analysis indicates that individuals with a potentially worse position on the labor market react more strongly to displacement in terms of entering self-employment.

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    Bibliographic Info

    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 16 (2009)
    Issue (Month): 5 (October)
    Pages: 556-565

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    Handle: RePEc:eee:labeco:v:16:y:2009:i:5:p:556-565

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

    Related research

    Keywords: Displacement Self-employment Plant closure Propensity score matching;

    References

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    16. Huttunen, Kristiina & Moen, Jarle & Salvanes, Kjell G., 2006. "How Destructive Is Creative Destruction? The Costs of Worker Displacement," IZA Discussion Papers 2316, Institute for the Study of Labor (IZA).
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    18. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, 01.
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    Cited by:
    1. Berglann, Helge & Moen, Espen R & Roed, Knut & Skogstrøm, Jens Fredrik, 2009. "Entrepreneurship: Origins and Returns," CEPR Discussion Papers 7360, C.E.P.R. Discussion Papers.
    2. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper 48403, University Library of Munich, Germany.
    3. Guido Schwerdt, 2007. "Labor Turnover before Plant Closure:'Leaving the sinking ship' vs. 'Captain throwing ballast overboard'," Economics Working Papers ECO2007/22, European University Institute.
    4. Røed, Knut, 2012. "Active Unemployment Insurance," IZA Policy Papers 41, Institute for the Study of Labor (IZA).
    5. Baumann, Florian & Brändle, Tobias, 2012. "Self-employment, educational attainment and employment protection legislation," Labour Economics, Elsevier, vol. 19(6), pages 846-859.
    6. Svaleryd, Helena, 2013. "Self-employment and the local business cycle," Working Paper Series 2013:16, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    7. Røed, Knut & Skogstrøm, Jens Fredrik, 2013. "Unemployment Insurance and Entrepreneurship," IZA Discussion Papers 7121, Institute for the Study of Labor (IZA).
    8. Pernilla Andersson Joona & Eskil Wadensjö, 2013. "The best and the brightest or the least successful? Self-employment entry among male wage-earners in Sweden," Small Business Economics, Springer, vol. 40(1), pages 155-172, January.

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