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Entrepreneurship and unemployment: a nonlinear bidirectional causality

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Listed:
  • Joao Ricardo Faria
  • Juan Carlos Cuestas
  • Estefania Mourelle

Abstract

This paper tests the view that the relation between unemployment and entrepreneurship is dynamic and possibly nonlinear. It performs Granger-causality tests and STAR-EXT estimation to assess the causality direction and the nonlinear nature of the relation for a set of OECD countries. The results reveal a bidirectional and nonlinear relation between business creation and changes in unemployment.

Suggested Citation

  • Joao Ricardo Faria & Juan Carlos Cuestas & Estefania Mourelle, 2008. "Entrepreneurship and unemployment: a nonlinear bidirectional causality," NBS Discussion Papers in Economics 2008/6, Economics, Nottingham Business School, Nottingham Trent University.
    • Handle: RePEc:nbs:wpaper:2008/6
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    References listed on IDEAS

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    More about this item

    Keywords

    New firms; employment creation; causality; nonlinearities; STAR-EXT;
    All these keywords.

    JEL classification:

    • J69 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Other
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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