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Creative Unemployment

Author

Listed:
  • Røed, Knut

    (Ragnar Frisch Centre for Economic Research)

  • Skogstrøm, Jens Fredrik

    (Ragnar Frisch Centre for Economic Research)

Abstract

We examine the impact of job loss on entrepreneurship behavior in Norway. Our identification strategy relies on the use of mass layoffs caused by bankruptcies as indicators of exogenous displacement. We find that working in a company which is going to close down due to bankruptcy during the next four years raises the subsequent entrepreneur rate by 3.7 percentage points (155 %) for men and 1.8 percentage points (180 %) for women, compared to working in a stable firm. These estimates are much larger than what has previously been reported in the literature. Taking into account that many workers lose their jobs in the comparison group of stable firms also, we reckon that the full effects of displacement are even larger.

Suggested Citation

  • Røed, Knut & Skogstrøm, Jens Fredrik, 2010. "Creative Unemployment," IZA Discussion Papers 5373, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5373
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    References listed on IDEAS

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    1. von Greiff, Jenny, 2009. "Displacement and self-employment entry," Labour Economics, Elsevier, vol. 16(5), pages 556-565, October.
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    Cited by:

    1. Poschke, Markus, 2013. "The Decision to Become an Entrepreneur and the Firm Size Distribution: A Unifying Framework for Policy Analysis," IZA Discussion Papers 7757, Institute of Labor Economics (IZA).
    2. Knut Røed & Jens Fredrik Skogstrøm, 2014. "Unemployment Insurance and Entrepreneurship," LABOUR, CEIS, vol. 28(4), pages 430-448, December.

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    More about this item

    Keywords

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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