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Self-Employment and Unemployment in Spanish Regions in the Period 1979-2001

  • Antonio Golpe

    (University of Huelva, Spain)

  • Andre van Stel

    ()

    (EIM Business and Policy Research, Zoetermeer, Netherlands; Cranfield University School of Management, UK; Max Planck Institute of Economics, Jena, Germany)

This paper investigates the relation between changes in self-employment and changes in unemployment at the regional level in Spain in the period 1979-2001. We estimate a vector autoregression model as proposed by Audretsch, Carree, van Stel and Thurik (2005) using a data base for Spanish regions. By estimating the model we are able to empirically distinguish between two directions of causality. On the one hand increases in self-employment may contribute to lower unemployment rates (the "entrepreneurial" effect). On the other hand, higher unemployment rates may push individuals into self-employment, thereby contributing to higher self-employment rates (the "refugee" effect). In our analysis of these two effects we distinguish between higher and lower income regions within Spain. We find empirical support for the "entrepreneurial" effect to exist, both in higher income and in lower income regions. As regards the "refugee" effect, the evidence is mixed. We find empirical support for this effect for higher income regions. Remarkably, we do not find evidence for a "refugee" effect in lower income regions of Spain, even though unemployment rates are on average higher in these regions. We argue that this may be partly related to a lack of incentives for unemployed individuals in these regions to find paid employment.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-021.

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Date of creation: 25 Jun 2007
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Handle: RePEc:jrp:jrpwrp:2007-021
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  1. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
  2. Thurik, A. Roy & Carree, Martin A. & van Stel, André & Audretsch, David B., 2008. "Does self-employment reduce unemployment?," Journal of Business Venturing, Elsevier, vol. 23(6), pages 673-686, November.
  3. Namkee Ahn & Juan Ramón García & Juan F. Jimeno, . "Well-being Consequences of Unemployment in Europe," Working Papers 2004-11, FEDEA.
  4. Andre van Stel & Martin Carree & Roy Thurik, . "The effect of entrepreneurial activity on national economic growth," Papers on Entrepreneurship, Growth and Public Policy 2005-04, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  5. Joost van Acht & Joop Stam & Roy Thurik & Ingrid Verheul, 2004. "Business Ownership and Unemployment in Japan," Papers on Entrepreneurship, Growth and Public Policy 2004-09, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  6. Michael Fritsch & Pamela Mueller, 2004. "Effects of New Business Formation on Regional Development over Time," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 961-975.
  7. Enrique López-Bazo & Tomás del Barrio & Manuel Artis, 2002. "The regional distribution of Spanish unemployment: A spatial analysis," Papers in Regional Science, Springer, vol. 81(3), pages 365-389.
  8. Michael Fritsch & Pamela Mueller, 2004. "The Effects of New Business Formation on Regional Development over Time," Papers on Entrepreneurship, Growth and Public Policy 2004-36, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  9. Roberto Bande & Melchor Fernandez & Victor Montuenga, 2005. "Regional Unemployment in Spain: Disparities, Business Cycle and Wage Setting," Documentos de trabajo - Analise Economica 0035, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
  10. Samuel Bentolila & Juan F. Jimeno, 2003. "Spanish Unemployment: The End of the Wild Ride?," CESifo Working Paper Series 940, CESifo Group Munich.
  11. Geroski, Paul A, 1989. "Entry, Innovation and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 572-78, November.
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