Modelling Entrepreneurship: Unifying The Equilibrium and Entry/Exit Approach
AbstractTwo approaches can be distinguished with respect to modelling entrepreneurship: (i) the approach focusing on the net development of the number of entrepreneurs in an equilibrium framework and (ii) the approach focusing on the entries and exits of entrepreneurs. In this paper we unify these approaches to arrive at a model explaining the equilibrium and actual number of entrepreneurs and the entry and exit rate of entrepreneurs simultaneously and consistently. We apply our unified approach to the Netherlands using self-employment data for the 1960–1999 period. We find error-correction of about 20% per year and a very different situation in terms of disequilibrium before and after the early 1980s. Periods of high unemployment appear to be characterized by both high entry and high exit rates. Copyright Springer 2005
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Bibliographic InfoArticle provided by Springer in its journal Small Business Economics.
Volume (Year): 25 (2005)
Issue (Month): 1 (08)
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Web page: http://www.springerlink.com/link.asp?id=100338
entrepreneurship; entry and exit; error correction; C32; L11; M13;
Other versions of this item:
- Gerrit de Wit & Niels Bosma & Martin Carree, 2002. "Modelling Entrepreneurship: unifying the equilibrium and entry/exit approach," Scales Research Reports N200201, EIM Business and Policy Research.
- Gerrit de Wit & Niels Bosma & Martin Carree, 2003. "Modelling Entrepreneurship: Unifying the Equilibrium and Entry/Exit Approach," Scales Research Reports H200305, EIM Business and Policy Research.
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
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