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Employment protection and regional self-employment rates in an economic downturn: a multilevel analysis

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  • Nikolaos Filippopoulos

    (University of Peloponnese)

  • Georgios Fotopoulos

    (University of Peloponnese)

Abstract

This research aims to investigate the role of employment protection in affecting the relationship between regional self-employment and unemployment during turbulent times. In doing so, data comprised of 230 regions, nested in 17 EU countries, for the 2008–2015 period were used. When accounting for individual effects, we find that an increase in regional unemployment would decrease regional self-employment, while the opposite was found true for employment protection. When accounting for the cross-level interaction between regional unemployment and national employment protection legislation, however, we find that the underlying increased labor market rigidity not only decreases regional self-employment, but it also magnifies the adverse effect of regional unemployment. Our key results thus indicate that high labor market rigidity hinders self-employment.

Suggested Citation

  • Nikolaos Filippopoulos & Georgios Fotopoulos, 2024. "Employment protection and regional self-employment rates in an economic downturn: a multilevel analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 72(2), pages 617-646, February.
    • Handle: RePEc:spr:anresc:v:72:y:2024:i:2:d:10.1007_s00168-023-01214-5
    DOI: 10.1007/s00168-023-01214-5
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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other

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