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Business Cycles, Unemployment and Entrepreneurial Entry: First Evidence from Germany

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  • Michael Fritsch
  • Alexander S. Kritikos
  • Katharina Pijnenburg

Abstract

We investigate whether people become more willingly self-employed during boom periods or in recessions and to what extent it is the business cycle or the employment status influencing entry rates into entrepreneurship. Our analysis for Germany reveals that start-up activities are positively influenced by unemployment rates and that the cyclical component of real GDP has a negative effect. This implies that new business formation is counter-cyclical. Further disentangling periods of low and high unemployment periods reveals a "low unemployment retard effect".

Suggested Citation

  • Michael Fritsch & Alexander S. Kritikos & Katharina Pijnenburg, 2013. "Business Cycles, Unemployment and Entrepreneurial Entry: First Evidence from Germany," Discussion Papers of DIW Berlin 1281, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1281
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.417619.de/dp1281.pdf
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    References listed on IDEAS

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    1. Martin Andersson & Sierdjan Koster, 2011. "Sources of persistence in regional start-up rates--evidence from Sweden," Journal of Economic Geography, Oxford University Press, vol. 11(1), pages 179-201, January.
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    Cited by:

    1. Suprinovič, Olga & Schneck, Stefan & Kay, Rosemarie, 2016. "Einmal Unternehmer, immer Unternehmer? Selbstständigkeit im Erwerbsverlauf," IfM-Materialien 248, Institut für Mittelstandsforschung (IfM) Bonn.
    2. Lechman, Ewa & Dominiak, Piotr, 2016. "Entrepreneurship vulnerability to business cycle. A new methodology for identification pro-cyclical and counter-cyclical patterns of entrepreneurial activity," MPRA Paper 68793, University Library of Munich, Germany.

    More about this item

    Keywords

    Self-employment; business cycle; unemployment; start-up;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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