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The institutions of economic freedom and entrepreneurship: evidence from panel data

  • Kristina Nyström


This paper provides new evidence on the determinants of entrepreneurship across countries. The paper investigates the relationship between the institutional setting, in terms of economic freedom, and entrepreneurship, as measured by self-employment in a panel data setting covering 23 OECD countries and the time-period 1972-2002. The measure of economic freedom includes five aspects: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and the regulation of credit, labour and business. The empirical findings show that a smaller government sector, better legal structure and security of property rights and less regulation of credit, labour and business tend to increase entrepreneurship.

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Article provided by Springer in its journal Public Choice.

Volume (Year): 136 (2008)
Issue (Month): 3 (September)
Pages: 269-282

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Handle: RePEc:kap:pubcho:v:136:y:2008:i:3:p:269-282
DOI: 10.1007/s11127-008-9295-9
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  1. Laura Alfaro & Andrew Charlton, 2006. "International Financial Integration and Entrepreneurship," CEP Discussion Papers dp0755, Centre for Economic Performance, LSE.
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  4. Bruce, Donald, 2000. "Effects of the United States tax system on transitions into self-employment," Labour Economics, Elsevier, vol. 7(5), pages 545-574, September.
  5. Stefano Scarpetta & Philip Hemmings & Thierry Tressel & Jaejoon Woo, 2002. "The Role of Policy and Institutions for Productivity and Firm Dynamics: Evidence from Micro and Industry Data," OECD Economics Department Working Papers 329, OECD Publishing.
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  7. John Carter, 2007. "An Empirical Note on Economic Freedom and Income Inequality," Public Choice, Springer, vol. 130(1), pages 163-177, January.
  8. Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.
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  13. Doucouliagos, Chris & Ulubasoglu, Mehmet Ali, 2006. "Economic freedom and economic growth: Does specification make a difference?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 60-81, March.
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  20. Magnus Henrekson, 2005. "Entrepreneurship: a weak link in the welfare state?," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 437-467, June.
  21. Kanniainen, Vesa & Vesala, Timo, 2005. "Entrepreneurship and labor market institutions," Economic Modelling, Elsevier, vol. 22(5), pages 828-847, September.
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  23. Mihir Desai & Paul Gompers & Josh Lerner, 2003. "Institutions, Capital Constraints and Entrepreneurial Firm Dynamics: Evidence from Europe," NBER Working Papers 10165, National Bureau of Economic Research, Inc.
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