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Does Self-Employment Reduce Unemployment?

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Author Info
Audretsch, David B
Carree, Martin A
Thurik, A R Roy
van Stel, A J

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Abstract

This paper investigates the dynamic interrelationship between self-employment and unemployment rates. On the one hand, unemployment rates may stimulate start-up activity of self-employed. On the other hand, higher rates of self-employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods. These two effects have resulted in considerable ambiguities about the interrelationship between unemployment and entrepreneurial activity. This paper introduces a two equation vector autoregression model capable of reconciling these ambiguities and tests it for data of 23 OECD countries over the period 1974-2002. The empirical results confirm the two distinct relationships between unemployment and self-employment, i.e. ‘refugee’ and ‘entrepreneurial’ effects. We also find that the ‘entrepreneurial’ effects are considerably stronger than the ‘refugee’ effects.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5057.

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Date of creation: May 2005
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Handle: RePEc:cpr:ceprdp:5057

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Related research
Keywords: entreprenuership Gibrat's Law

Other versions of this item:

Find related papers by JEL classification:
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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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.:
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  27. Isabel Grilo & Roy Thurik, 2005. "Entrepreneurial engagement levels in the European Union," Discussion Papers on Entrepreneurship, Growth and Public Policy 2005-29, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
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Full references

Cited by:
(explanations, 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. Rui Baptista & Paulo Madruga & Vitor Escaria, . "Entrepreneurship, Regional Development and Job Creation: the Case of Portugal," Discussion Papers on Entrepreneurship, Growth and Public Policy 2005-06, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
  2. Antonio Golpe & Andre van Stel, 2007. "Self-Employment and Unemployment in Spanish Regions in the Period 1979-2001," Jena Economic Research Papers in Economics 2007-021, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek. [Downloadable!]
  3. André van Stel & Roy Thurik & Ingrid Verheul & Lendert Baljeu, 2007. "The Relationship between Entrepreneurship and Unemployment in Japan," Tinbergen Institute Discussion Papers 07-080/3, Tinbergen Institute, revised 14 Jul 2008. [Downloadable!]
  4. Lorraine Uhlaner & Roy Thurik, 2005. "Post-Materialism Influencing Total Entrepreneurial Activity Across Nations," Discussion Papers on Entrepreneurship, Growth and Public Policy 2005-20, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
    Other versions:
  5. Isabel Grilo & Roy Thurik, 2005. "Entrepreneurial engagement levels in the European Union," Discussion Papers on Entrepreneurship, Growth and Public Policy 2005-29, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
    Other versions:
  6. Andre van Stel & Lendert Baljeu & Roy Thurik & Ingrid Verheul, 2006. "The Contribution of Business Ownership in Bringing Down Unemployment in Japan," Discussion Papers on Entrepreneurship, Growth and Public Policy 2006-05, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
  7. Martin Carree & André van Stel & Roy Thurik & Sander Wennekers, 2007. "The Relation between Economic Development and Business Ownership revisited," Tinbergen Institute Discussion Papers 07-022/3, Tinbergen Institute. [Downloadable!]
  8. André van Stel & Roy Thurik & Andrew Burke, 2008. "Firms and Profits in the Retail Industry: Blue Ocean versus Competitive Strategy," Scales Research Reports H200801, EIM Business and Policy Research. [Downloadable!]
  9. Sindy A. González & Héctor J. Villarreal, 2006. "More Pushed than Pulled: Self-employment in rural Mexico ten years after NAFTA," Working Papers 20063, Escuela de Graduados en Administración Pública y Políticas Públicas, Campus Monterrey, revised Nov 2006. [Downloadable!]
  10. Leitão, João & Ferreira, João, 2007. "Liberalization of European Telecommunications and Entrepreneurship: Why German and Portuguese Experiences are so Equal and so Different?," MPRA Paper 5728, University Library of Munich, Germany. [Downloadable!]
  11. Pernilla Andersson & Eskil Wadensjö, 2006. "Employees Who Become Self-Employed: Do Labour Income and Wages Have an Impact?," IZA Discussion Papers 1971, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Verheul, I. & Stel, A.J. van & Thurik, A.R., 2005. "Explaining Female and Male Entrepreneurship at the Country Level," Research Paper ERS-2005-089-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
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  13. Daniela Glocker & Viktor Steiner, 2007. "Self-Employment - a Way to End Unemployment? : Empirical Evidence from German Pseudo-Panel Data," Discussion Papers of DIW Berlin 661, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  14. Roy Thurik & Isabel Grilo, 2005. "Latent and actual entrepreneurship in Europe and the US: some recent developments," Discussion Papers on Entrepreneurship, Growth and Public Policy 2005-24, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
    Other versions:
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