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Entrepreneurship and unemployment: A nonlinear bidirectional causality?

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  • Faria, João Ricardo
  • Cuestas, Juan Carlos
  • Mourelle, Estefanía

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

  • Faria, João Ricardo & Cuestas, Juan Carlos & Mourelle, Estefanía, 2010. "Entrepreneurship and unemployment: A nonlinear bidirectional causality?," Economic Modelling, Elsevier, vol. 27(5), pages 1282-1291, September.
    • Handle: RePEc:eee:ecmode:v:27:y:2010:i:5:p:1282-1291
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    More about this item

    Keywords

    New firms Employment creation Causality Nonlinearities STAR-EXT;

    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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