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Effects of Unemployment on New Firm Formation: Micro-level Panel Data Evidence from Finland

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Author Info
 Ritsila, Jari
Tervo, Hannu

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Abstract

This paper aims to provide a comprehensive insight into the role that unemployment plays in influencing new firm formation. Panel data models and micro-level data are used to help achieve this objective. We endeavor to identify simultaneously the separate effects of personal, regional and national unemployment on new firm formation in Finland for the period 1987-1995. The results indicate considerable evidence for a positive and non-linear effect of personal unemployment on the likelihood of an individual to become an entrepreneur. The findings also indicate that the economic situation has an effect on firm formation: times of low unemployment and business prosperity favor entrepreneurship. On the other hand, the analysis gives no clear evidence of the regional unemployment situation affecting the likelihood of founding a business. Copyright 2002 by Kluwer Academic Publishers

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Publisher Info
Article provided by Springer in its journal Small Business Economics.

Volume (Year): 19 (2002)
Issue (Month): 1 (August)
Pages: 31-40
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Handle: RePEc:kap:sbusec:v:19:y:2002:i:1:p:31-40

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. David Keeble & Sheila Walker, 1994. "New Firms, Small Firms and Dead Firms: Spatial Patterns and Determinants in the United Kingdom," Regional Studies, Taylor and Francis Journals, vol. 28(4), pages 411-427, July. [Downloadable!] (restricted)
  2. Meager, Nigel, 1992. " Does Unemployment Lead to Self-employment?," Small Business Economics, Springer, vol. 4(2), pages 87-103, June.
  3. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August. [Downloadable!] (restricted)
  4. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May. [Downloadable!] (restricted)
  5. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-64, May. [Downloadable!] (restricted)
  6. Moulton, Brent R & Randolph, William C, 1989. "Alternative Tests of the Error Components Model," Econometrica, Econometric Society, vol. 57(3), pages 685-93, May. [Downloadable!] (restricted)
  7. Pissarides, Christopher A & Wadsworth, Jonathan, 1989. "Unemployment and the Inter-regional Mobility of Labour," Economic Journal, Royal Economic Society, vol. 99(397), pages 739-55, September. [Downloadable!] (restricted)
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  1. Hannu Tervo, 2006. "Regional unemployment, self-employment and family background," Applied Economics, Taylor and Francis Journals, vol. 38(9), pages 1055-1062, May. [Downloadable!] (restricted)
  2. Hannu Tervo, 2004. "Self-employment dynamics in rural and urban labour markets," ERSA conference papers ersa04p396, European Regional Science Association. [Downloadable!]
  3. Michele Cincera & Lydia Greunz & Jean-Luc Guyot & Olivier Lohest, 2006. "Capital humain et processus de création d’entreprise : le cas des primo-créateurs wallons," Working Papers DULBEA 06-11.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
  4. Hannu Tervo & Mika Haapanen, 2005. "Self-employment duration in urban and rural locations," ERSA conference papers ersa05p315, European Regional Science Association. [Downloadable!]
  5. Hannu Niittykangas & Hannu Tervo, 2005. "Spatial variations in intergenerational transmission of self-employment," Regional Studies, Taylor and Francis Journals, vol. 39(3), pages 319-332, May. [Downloadable!] (restricted)
  6. Niittykangas, Hannu & Tervo, Hannu, 2002. "Intergenerational mobility in self-employment: a regional approach," ERSA conference papers ersa02p350, European Regional Science Association. [Downloadable!]
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