Business ownership and sectoral growth
In this report we investigated the development of business ownership (self-employment) rates over time at the sectoral level, and the effect these rates have on sectoral output growth. In an earlier exercise, Carree et al. (2002) presented a two-equation model to analyse the interrelationship between economy-wide business-ownership rates and economic development. Their analysis raises an important research question: to what extent do differences in business ownership at the economy-wide level reflect differences in the sectoral structures of economies or differences in business-ownership rates at the sectoral (or even industry) level? The current paper investigates this question making use of a sectoral data base of 21 OECD countries for the period 1970-98. Our estimation results suggest that for our sample of OECD countries there is, on average, a too low business-ownership rate in manufacturing and a too high business-ownership rate in services. The results also show that the results found in Carree et al. (2002) are not solely due to countries differing in sectoral structures.
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