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Do the unemployed become successful entrepreneurs?

Author

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  • Pernilla Andersson
  • Eskil Wadensjö

Abstract

Purpose - Many unemployed people become self-employed. Self-employment, however, does not necessarily lead to success. The main objective of the paper is to compare the economic outcome and success as self-employed between those who entered self-employment from paid employment, unemployment and inactivity. The question is if individuals who enter self-employment from a weak position on the labour market are equally successful as those who enter self-employment from a stronger position. Design/methodology/approach - Micro-econometric methods are used to estimate first the propensity to become self-employed in the period 1998-2002 among Swedish-born men aged 20-60 years who were unemployed, inactive or wage earners in 1998, and second, the economic outcome of self-employment. Economic outcome in 2002 is measured using income from self-employment and having employees in the firm. Findings - The study finds that the unemployed, and even more the inactive, are overrepresented among those who become self-employed. Those who were wage earners in 1998 have higher incomes and are also employing other people in their business to a much higher extent in 2002 than those who were unemployed or inactive in 1998. Practical implications - The results indicate that support for unemployed to become self-employed should be implemented with great care. The economic outcome of self-employment is inadequate for many who were unemployed earlier. Originality/value - The study will be valuable for those who are interested in those who become self-employed and in the economic outcome of self-employment for different groups.

Suggested Citation

  • Pernilla Andersson & Eskil Wadensjö, 2007. "Do the unemployed become successful entrepreneurs?," International Journal of Manpower, Emerald Group Publishing, vol. 28(7), pages 604-626, October.
  • Handle: RePEc:eme:ijmpps:v:28:y:2007:i:7:p:604-626
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    Keywords

    Self-employment; Unemployment; Income; Sweden;

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