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Entrepreneurship, Economic Risks, and Risk Insurance in the Welfare State: Results with OECD Data 1978-93

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  • Pekka Ilmakunnas
  • Vesa Kanniainen

Abstract

We find evidence in the OECD cross-country data to support the Knightian view that non-diversifiable economic risks shape equilibrium entrepreneurship in an occupational choice model. Differential social insurance of entrepreneurial and labor risk is found to be statistically significant and detrimental to entrepreneurship. The crowding-out effect of public production of private goods on entrepreneurship dominates the crowding-in effect of public production of public goods in the OECD data. Weak evidence is found for the proposition that the rate of entrepreneurship is related to the degree of income inequality and to the union power in the economy. The results also suggest that in countries with low GDP per capita ratio, self-employment is high. Copyright Verein fü Socialpolitik and Blackwell Publishers Ltd 2001.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/1468-0475.00034
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Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 2 (2001)
Issue (Month): 3 (08)
Pages: 195-218

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Handle: RePEc:bla:germec:v:2:y:2001:i:3:p:195-218
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Cited by:

  1. Niklas Elert, 2014. "What determines entry? Evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 55-92, August.
  2. Vesa Kanniainen & Mikko Leppamaki, 2000. "Entrepreneurship in a Unionised Economy," Econometric Society World Congress 2000 Contributed Papers 1473, Econometric Society.
  3. Stenkula, Mikael, 2009. "Taxation and Entrepreneurship in a Welfare State," Working Paper Series 800, Research Institute of Industrial Economics.

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