The Impact of Personal Characteristics and the Regional Milieu on the Transition from Unemployment to Self-employment: Empirical Evidence for Germany
AbstractThe focus of this paper is on the choice of the unemployed between becoming an entrepreneur or not. It contributes to the literature by empirically investigating the impact of personal characteristics and attitudes, and of the regional "entrepreneurial milieu", on the individual decision to start a new business out of unemployment. The econometric study is based on data from a recent representative survey of the population in ten German planning regions. We use a version of the logit model that takes care of both the rare events nature of the transition from unemployment to self-employment, and of the regional stratification of the data, and the results of the non linear models are carefully interpreted and illustrated. We show that lack of personal contact with a young entrepreneur reduces the probability of starting one's own business. A favourable 'regional entrepreneurial milieu' (proxied by higher levels of current start-up activity and larger shares of unemployed among the starters in a region) has a positive effect on the individual propensity to step into self-employment. All these impacts are not only statistically significant, but economically important, too. A comparison of unemployed with employed and not employed nascent entrepreneurs reveals remarkable differences regarding the impact of sex, age, and higher education, while the positive impact of personal contacts with a young entrepreneur and of a comparable high share of nascent entrepreneurs in the region holds across all groups.
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Bibliographic InfoArticle provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.
Volume (Year): 223 (2003)
Issue (Month): 2 (March)
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Entrepreneurship; unemployment; Germany; regional milieu; rare events logit;
Find related papers by JEL classification:
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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- repec:iab:iabzaf:v:38:i:2/3:p:325-340 is not listed on IDEAS
- Pfeiffer, Friedhelm, 2005. "Existenzgründungen: Ein Weg zur Beschäftigungsförderung? (Firm foundation * a way to enhance employment?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 325-340.
- Caliendo, Marco & Fossen, Frank M. & Kritikos, Alexander S., 2006.
"Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally-Validated Survey,"
IZA Discussion Papers
2168, Institute for the Study of Labor (IZA).
- Marco Caliendo & Frank Fossen & Alexander Kritikos, 2009. "Risk attitudes of nascent entrepreneurs–new evidence from an experimentally validated survey," Small Business Economics, Springer, vol. 32(2), pages 153-167, February.
- Marco Caliendo & Frank M. Fossen & Alexander S. Kritikos, 2006. "Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally-Validated Survey," Discussion Papers of DIW Berlin 600, DIW Berlin, German Institute for Economic Research.
- Caliendo, Marco & Fossen, Frank M. & Kritikos, Alexander S., 2006. "Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally Validated Survey," Discussion Papers 252, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
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