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Displacement and self-employment entry

  • von Greiff, Jenny
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    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.

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    File URL: http://www.sciencedirect.com/science/article/B6VFD-4VS4046-1/2/ede692b3b8d39f6af733b34b5851e169
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    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 16 (2009)
    Issue (Month): 5 (October)
    Pages: 556-565

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    Handle: RePEc:eee:labeco:v:16:y:2009:i:5:p:556-565
    Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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