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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.

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  • Pekka Ilmakunnas & Vesa Kanniainen, 2001. "Entrepreneurship, Economic Risks, and Risk Insurance in the Welfare State: Results with OECD Data 1978–93," German Economic Review, Verein für Socialpolitik, vol. 2(3), pages 195-218, August.
  • Handle: RePEc:bla:germec:v:2:y:2001:i:3:p:195-218
    DOI: 10.1111/1468-0475.00034
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    Cited by:

    1. Mikael Stenkula, 2012. "Taxation and entrepreneurship in a welfare state," Small Business Economics, Springer, vol. 39(1), pages 77-97, July.
    2. 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.
    3. Mikko Leppämäki & Vesa Kanniainen, 2000. "Entrepreneurship in a Unionised Economy," CESifo Working Paper Series 379, CESifo.
    4. Claire Economidou & Luca Grilli & Magnus Henrekson & Mark Sanders, 2018. "Financial and Institutional Reforms for an Entrepreneurial Society," Small Business Economics, Springer, vol. 51(2), pages 279-291, August.
    5. Ant Bozkaya & William R. Kerr, 2014. "Labor Regulations and European Venture Capital," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(4), pages 776-810, December.
    6. Mikko Leppämäki & Vesa Kanniainen, 2000. "Entrepreneurship in a Unionised Economy," CESifo Working Paper Series 379, CESifo.
    7. syed, irfan, 2020. "A new framework of analysis of Political Risk in OECD Countries," MPRA Paper 102636, University Library of Munich, Germany, revised 03 Apr 2020.
    8. Elert, Niklas & Henrekson, Magnus & Stenkula, Mikael, 2017. "Institutional Reform for Innovation and Entrepreneurship: An Agenda for Europe," Working Paper Series 1150, Research Institute of Industrial Economics, revised 16 Feb 2017.
    9. Scott Jackson, 2010. "Mulling over Massachusetts: Health Insurance Mandates and Entrepreneurs," Entrepreneurship Theory and Practice, , vol. 34(5), pages 909-932, September.

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