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The Relationship between Entrepreneurship and Unemployment: is Portugal an Outlier?

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  • Rui Baptista

    ()

  • Roy Thurik

    ()

Abstract

The present paper examines the relationship between entrepreneurship, as measured by the variation in business ownership rates, and unemployment in Portugal in the period from 1972-2002. It concludes that Portugal has been a relative outlier in regard to the effects of entrepreneurship on unemployment when compared with the OECD average. Although the nature of entrepreneurship may be different in the Portuguese case, due to a high proportion of "micro-businesses" created for subsistence which have little impact on growth and employment, this factor does not seem to be the primary reason for the observed discrepancies. The differences between observed levels of unemployment for Portugal and those predicted by a model based on OECD data seem to be mostly associated with macroeconomic fluctuations associated with European business cycles and EU "cohesion" funding, as well as with adjustment costs to new technology adoption which lead to productivity slowdowns, thus increasing the time lag for the effect of entrepreneurship on employment beyond the OECD average.

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Bibliographic Info

Paper provided by Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group in its series Papers on Entrepreneurship, Growth and Public Policy with number 2004-40.

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Length: 21 pages
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:esi:egpdis:2004-40

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  1. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter.
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  4. Francesca Lotti & Enrico Santarelli & Marco Vivarelli, 2003. "Does Gibrat's Law hold among young, small firms?," Journal of Evolutionary Economics, Springer, vol. 13(3), pages 213-235, August.
  5. Andr� 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.
  6. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
  7. Michael C. Jensen, 1994. "The Modern Industrial Revolution, Exit, And The Failure Of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 6(4), pages 4-23.
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  11. Joost van Acht & Joop Stam & Roy Thurik & Ingrid Verheul, 2004. "Business Ownership and Unemployment in Japan," Papers on Entrepreneurship, Growth and Public Policy 2004-09, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  12. Niels Bosma & Ingrid Verheul & Jolanda Hessels & Mirjam van Praag & Veronique Schutjens, 2011. "Entrepreneurship and Role Models," Scales Research Reports H201017, EIM Business and Policy Research.
  13. John E. Kwoka Jr. & Lawrence J. White, 2000. "The New Industrial Organization and Small Business," Working Papers 00-03, New York University, Leonard N. Stern School of Business, Department of Economics.
  14. Francesca Lotti & Enrico Santarelli & Marco Vivarelli, 2001. "The relationship between size and growth: the case of Italian newborn firms," Applied Economics Letters, Taylor & Francis Journals, vol. 8(7), pages 451-454.
  15. Highfield, Richard & Smiley, Robert, 1987. "New business starts and economic activity : An empirical investigation," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 51-66, March.
  16. Audretsch, D.B. & Klomp, L. & Thurik, A.R., 2002. "Gibrat's Law: are the services different?," ERIM Report Series Research in Management ERS-2002-04-STR, 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.
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Citations

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Cited by:
  1. Emilio Congregado & Vicente Esteve & Antonio A. Golpe, 2012. "Job Creation and the Self-employed Firm Size: evidence from Spain," Working Papers 1202, Department of Applied Economics II, Universidad de Valencia.
  2. 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.
  3. Rui Baptista & Vítor Escária & Paulo Madruga, 2008. "Entrepreneurship, regional development and job creation: the case of Portugal," Small Business Economics, Springer, vol. 30(1), pages 49-58, January.
  4. André van Stel & Roy Thurik & David Audretsch & Martin Carree, 2007. "Does Self-Employment Reduce Unemployment?," Scales Research Reports H200709, EIM Business and Policy Research.
  5. Joanna Tyrowicz & Joanna Nestorowicz, 2010. "Cynicism Starts Young: Age and Entrepreneurship over Transition," Working Papers 2010-02, Faculty of Economic Sciences, University of Warsaw.
  6. Carlos Carreira & Paulino Teixeira, 2009. "The Shadow of Death: Analysing the Pre-Exit Productivity of Portuguese Manufacturing Firms," GEMF Working Papers 2008-05, GEMF - Faculdade de Economia, Universidade de Coimbra.
  7. Aurora A.C. Teixeira & Todd Davey, 2008. "Attitudes of Higher Education students to new venture creation: a preliminary approach to the Portuguese case," FEP Working Papers 298, Universidade do Porto, Faculdade de Economia do Porto.
  8. Joao Ricardo Faria & Juan Carlos Cuestas & Estefania Mourelle, 2008. "Entrepreneurship and unemployment: a nonlinear bidirectional causality," Working Papers 2008/6, Nottingham Trent University, Nottingham Business School, Economics Division.

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