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Displacement and self-employment entry

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  • von Greiff, Jenny

Abstract

Displacement is expected to decrease the reservation wage of self-employment by decreasing earnings in paid employment and increasing the probability of unemployment. This paper examines whether displacement increases the probability of self-employment using propensity score matching on Swedish register-based data. The data include all individuals displaced due to plant closures in 1987 and 1988, and a random sample of 200,000 employed individuals. The results suggest that displacement almost doubles the probability of entering self-employment the year after displacement. A sub-sample analysis indicates that individuals with a potentially worse position on the labor market react more strongly to displacement in terms of entering self-employment.

Suggested Citation

  • von Greiff, Jenny, 2009. "Displacement and self-employment entry," Labour Economics, Elsevier, vol. 16(5), pages 556-565, October.
  • Handle: RePEc:eee:labeco:v:16:y:2009:i:5:p:556-565
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    References listed on IDEAS

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    Cited by:

    1. Knut Røed & Jens Fredrik Skogstrøm, 2014. "Unemployment Insurance and Entrepreneurship," LABOUR, CEIS, vol. 28(4), pages 430-448, December.
    2. Hartmut Egger & Udo Kreickemeier & Jens Wrona, 2017. "Offshoring Domestic Jobs," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 2, pages 27-70 World Scientific Publishing Co. Pte. Ltd..
    3. Berglann, Helge & Moen, Espen R. & Røed, Knut & Skogstrøm, Jens Fredrik, 2011. "Entrepreneurship: Origins and returns," Labour Economics, Elsevier, vol. 18(2), pages 180-193, April.
    4. Léa Toulemon & Lexane Weber-Baghdiguian, 2016. "Long-term Impact of Job Displacement on Job Quality and Satisfaction: Evidence from Germany," Working Papers halshs-01418183, HAL.
    5. Røed, Knut, 2012. "Active Unemployment Insurance," IZA Policy Papers 41, Institute for the Study of Labor (IZA).
    6. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    7. Vera Rocha & Anabela Carneiro & Celeste Varum, 2015. "Entry and exit dynamics of nascent business owners," Small Business Economics, Springer, vol. 45(1), pages 63-84, June.
    8. Schwerdt, Guido, 2011. "Labor turnover before plant closure: "Leaving the sinking ship" vs. "Captain throwing ballast overboard"," Labour Economics, Elsevier, vol. 18(1), pages 93-101, January.
    9. Helena Svaleryd, 2015. "Self-employment and the local business cycle," Small Business Economics, Springer, vol. 44(1), pages 55-70, January.
    10. Richard Upward & Peter Wright, 2015. "Don’t Look Down: New Evidence on Job Loss in a Flexible Labour Market," Discussion Papers 2015-10, University of Nottingham, GEP.
    11. Pernilla Andersson Joona & Eskil Wadensjö, 2013. "The best and the brightest or the least successful? Self-employment entry among male wage-earners in Sweden," Small Business Economics, Springer, vol. 40(1), pages 155-172, January.
    12. Failla, Virgilio & Melillo, Francesca & Reichstein, Toke, 2017. "Entrepreneurship and employment stability — Job matching, labour market value, and personal commitment," Journal of Business Venturing, Elsevier, vol. 32(2), pages 162-177.
    13. Léa Toulemon, 2016. "Job quality, Health Insurance and the Price of Medical Products: Essays in Applied Economics," Sciences Po publications info:hdl:2441/3018m4nhj18, Sciences Po.
    14. Nyström, Kristina, 2016. "Regional resilience to displacement: Evidence from Panel and Quantile regressions," Ratio Working Papers 276, The Ratio Institute.
    15. Marios Michaelides & Scott Davis, 2016. "From unemployment to self-employment: the role of entrepreneurship training," University of Cyprus Working Papers in Economics 09-2016, University of Cyprus Department of Economics.
    16. Baumann, Florian & Brändle, Tobias, 2012. "Self-employment, educational attainment and employment protection legislation," Labour Economics, Elsevier, vol. 19(6), pages 846-859.

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