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Unemployment Insurance and Entrepreneurship

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  • Røed, Knut

    () (Ragnar Frisch Centre for Economic Research)

  • Skogstrøm, Jens Fredrik

    () (Ragnar Frisch Centre for Economic Research)

Abstract

Based on administrative registers from Norway, we examine how unemployment insurance (UI) and active labor market programs (ALMP) affect the transition rates from unemployment to regular employment and entrepreneurship. We find that the entrepreneurship hazard is highly responsive with respect to UI incentives, and that the probability of starting up a new business increases sharply around the time of UI exhaustion. We also find that while participation in ALMP has a positive impact on the employment hazard, it has no effect on entrepreneurship. We speculate that this reflects the programs' one-sided focus on job search rather than job creation.

Suggested Citation

  • Røed, Knut & Skogstrøm, Jens Fredrik, 2013. "Unemployment Insurance and Entrepreneurship," IZA Discussion Papers 7121, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7121
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    More about this item

    Keywords

    unemployment; entrepreneurship; self-employment;

    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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