Unraveling the relationship between the business cycle and the own-account worker's decision to hire employees
We study the role of the business cycle in the individual decision of own-account workers to hire employees. Using panel data from the European Community Household Panel for the EU-15 countries, we show that own-account workers are less likely to hire employees during recessions. Next, we focus on identifying the underlying mechanisms of this negative relationship, while bearing in mind that liquidity constraints and unemployment are more common during recessions. First, we observe how liquidity constraints reduce the probability of transitioning from own-account worker to employer. Second, we find that non-higher educated own-account workers who were formerly unemployed are less likely to take on employees compared to those who were formerly in paid employment. This lower likelihood does however not seem to apply to formerly unemployed own-account workers who enjoyed tertiary education. These and other results from the paper suggest that formal education and former work experience are important assets for own-account workers which increase the probability that they create new jobs. �
|Date of creation:||17 Apr 2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (+31) 79 341 36 34
Fax: (+31) 79 341 50 24
Web page: http://www.entrepreneurship-sme.eu/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
- José Millán & Emilio Congregado & Concepción Román, 2012. "Determinants of self-employment survival in Europe," Small Business Economics, Springer, vol. 38(2), pages 231-258, February.
When requesting a correction, please mention this item's handle: RePEc:eim:papers:h201302. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster EIM)
If references are entirely missing, you can add them using this form.