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The Dynamics of Entrepreneurship: Hysteresis, Business Cycles and Government Policy

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  • Congregado, Emilio

    ()
    (University of Huelva)

  • Golpe, Antonio A.

    ()
    (University of Huelva)

  • Parker, Simon C.

    ()
    (Western University, Canada)

Abstract

This paper estimates an unobserved components model to explore the macro dynamics of entrepreneurship in Spain and the US. We ask whether entrepreneurship exhibits hysteresis, defined as a macro dynamic structure in which cyclical fluctuations have persistent effects on the natural rate of entrepreneurship. We find evidence of hysteresis in Spain, but not the US, while in both countries business cycle output variations significantly affect future rates of entrepreneurship. The article discusses implications of the findings for the design of entrepreneurship policies.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4093.

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Length: 32 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4093

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Keywords: hysteresis; unobserved components model; time series models; business cycles; self-employment; entrepreneurship;

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Cited by:
  1. Milo Bianchi, 2012. "Financial Development, Entrepreneurship, and Job Satisfaction," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 273-286, February.
  2. Gohmann, Stephan F. & Fernandez, Jose M., 2014. "Proprietorship and unemployment in the United States," Journal of Business Venturing, Elsevier, vol. 29(2), pages 289-309.
  3. Klapper, Leora & Love, Inessa & Randall, Douglas, 2014. "New firm registration and the business cycle," Policy Research Working Paper Series 6775, The World Bank.
  4. Emilio Congregado & José María Millán & Concepción Román, 2014. "The emergence of new entrepreneurs in Europe," Economie Internationale, CEPII research center, CEPII research center, issue 138, pages 28–48.
  5. Mathilde Aubry & Jean Bonnet & Patricia Renou-Maissant, 2013. "Cycle économique et comportement entrepreneurial sur données régionales françaises," Economics Working Paper Archive (University of Rennes 1 & University of Caen), Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS 201332, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  6. Mathilde Aubry & Jean Bonnet & Patricia Renou-Maissant, 2013. "Business cycle and entrepreneurial behavior using French regional data," Economics Working Paper Archive (University of Rennes 1 & University of Caen), Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS 201304, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  7. Marcus Dejardin, 2011. "Linking net entry to regional economic growth," Small Business Economics, Springer, Springer, vol. 36(4), pages 443-460, May.
  8. Millán, José María & Congregado, Emilio & Román, Concepción, 2014. "Persistence in entrepreneurship and its implications for the European entrepreneurial promotion policy," Journal of Policy Modeling, Elsevier, Elsevier, vol. 36(1), pages 83-106.
  9. Rafik Abdesselam & Jean Bonnet & Patricia Renou-Maissant, 2013. "Typology of the French regional development: revealing the refugee/Schumpeter effects in new-firms startups," Economics Working Paper Archive (University of Rennes 1 & University of Caen), Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS 201333, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  10. Fritsch, Michael & Kritikos, Alexander S. & Pijnenburg, Katharina, 2013. "Business Cycles, Unemployment and Entrepreneurial Entry: Evidence from Germany," IZA Discussion Papers 7852, Institute for the Study of Labor (IZA).
  11. Taylor, Mark P., 2011. "Self-employment flows and persistence: a European comparative analysis," ISER Working Paper Series 2011-26, Institute for Social and Economic Research.

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