Entrepreneurship, Asymmetric Information, and Unemployment
AbstractWe examine how three sources of asymmetric information affect the supply of entrepreneurs and unemployment. In the first case, banks cannot observe entrepreneurs' risk of failure so ration credit. This increases the number of entrepreneurs and the level of unemployment. In the second case, firms cannot observe workers' effort so offer a wage above the market clearing one. This results in unemployment and too few entrepreneurs. The final case arises when firms cannot observe workers' abilities. A pooling wage is offered and results in too many entrepreneurs. The role of government in restoring efficiency is explored. Copyright Kluwer Academic Publishers 1998
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 5 (1998)
Issue (Month): 3 (July)
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Web page: http://www.springerlink.com/link.asp?id=102915
Entrepreneurship; unemployment; occupational choice;
Other versions of this item:
- Robin Boadway & Nicolas Marceau & Maurice Marchand & Marianne Vigneault, 1998. "Entrepreneurship, Asymmetric Information and Unemployment," Cahiers de recherche CREFE / CREFE Working Papers 57, CREFE, Université du Québec à Montréal.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
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