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Entrepreneurship and unemployment: a nonlinear bidirectional causality

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Author Info
Joao Ricardo Faria
Juan Carlos Cuestas
Estefania Mourelle

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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.

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File URL: http://www.ntu.ac.uk/research/document_uploads/85416.pdf
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File Function: First version, 2008
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Publisher Info
Paper provided by Nottingham Trent University, Nottingham Business School, Economics Division in its series Working Papers with number 2008/6.

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Date of creation: Jun 2008
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Handle: RePEc:nbs:wpaper:2008/6

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Web page: http://www.ntu.ac.uk/nbs

For technical questions regarding this item, or to correct its listing, contact: (Juan Carlos Cuestas).

Related research
Keywords: New firms; employment creation; causality; nonlinearities; STAR-EXT;

Other versions of this item:

Find related papers by JEL classification:
J69 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Other
L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups

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  1. Nadir Ocal & Denise R. Osborn, 2000. "Business cycle non-linearities in UK consumption and production," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(1), pages 27-43. [Downloadable!]
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    Other versions:
  4. Audretsch, David B & Thurik, A Roy, 2001. "What's New about the New Economy?," Industrial and Corporate Change, Oxford University Press, vol. 10(1), pages 267-315, March.
  5. D.B. Audretsch & M.A. Carree & A.R. Thurik, 2001. "Does Entrepreneurship reduce Unemployment?," Tinbergen Institute Discussion Papers 01-074/3, Tinbergen Institute, revised 24 Oct 2008. [Downloadable!]
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  8. Joao Ricardo Faria & Juan Carlos Cuestas & Luis Gil-Alana, 2008. "Unemployment and entrepreneurship: a cyclical relationship?," Working Papers 2008/2, Nottingham Trent University, Nottingham Business School, Economics Division. [Downloadable!]
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  12. David B. Audretsch & A. Roy Thurik, 2000. "Capitalism and democracy in the 21st Century: from the managed to the entrepreneurial economy," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 17-34. [Downloadable!] (restricted)
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  15. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November. [Downloadable!] (restricted)
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  16. 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. [Downloadable!] (restricted)
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