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Self-Employment and Economic Performance: A Geographically Weighted Regression Approach for European Regions

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  • Katharina Pijnenburg

Abstract

The self-employment rate includes entrepreneurs out of opportunity and entrepreneurs out of necessity. While the effect of opportunity entrepreneurs on economic development should be positive, there should be no or a negative effect of necessity entrepreneurship. We use a geographically weighted regression (GWR) approach to analyze whether the effect of self-employment on economic development is heterogeneous across European NUTS-2 regions. We find that regions having a significant positive effect of self-employment on economic development in the GWR estimation have, on average, a lower self-employment rate than regions with a significant negative effect. The concept of equilibrium rate of entrepreneurship is applied in an attempt to estimate a level of the self-employment rate from which relatively more entrepreneurs are self-employed out of necessity than out of opportunity. We find that in regions where the self-employment rate is above the equilibrium rate, self-employment has indeed a negative effect, while in regions where it is below the equilibrium rate the effect is positive.

Suggested Citation

  • Katharina Pijnenburg, 2013. "Self-Employment and Economic Performance: A Geographically Weighted Regression Approach for European Regions," Discussion Papers of DIW Berlin 1272, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1272
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    Cited by:

    1. Jean Bonnet & Sébastien Bourdin & Fatten Gazzah, 2017. "The entrepreuneurial context, a factor of Economic Growth in the Europe Union? A GWR analysis on the EU Regions," Working Papers halshs-01619798, HAL.

    More about this item

    Keywords

    self-employment; economic performance; geographically weighted regression;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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