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Recentralization and self‐employment: A quasi‐natural experiment in Switzerland

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  • Pankaj C. Patel

Abstract

According to a classical Hayekian proposition, bottom‐up systems governed by local institutions are better at combining knowledge and allocating resources to promote entrepreneurship. Exploiting the staggered adoption of recentralization (or reversal of decentralization) from municipality to canton in 19 of the 26 Swiss cantons between 2000 and 2014, and using fixed‐effects estimates, we find that recentralization lowered self‐employment, but the effects were small. Demographic factors, psychological characteristics, income, and regional identity did not meaningfully affect the heterogeneity of this association. In strong institutional settings such as Switzerland, recentralization from lower to higher levels of sub‐national government systems seems to have limited effects on self‐employment.

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  • Pankaj C. Patel, 2022. "Recentralization and self‐employment: A quasi‐natural experiment in Switzerland," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1379-1402, July.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:5:p:1379-1402
    DOI: 10.1002/mde.3461
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