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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. Audretsch, David B & Carree, Martin A & Thurik, A R Roy & van Stel, André, 2005. "Does Self-Employment Reduce Unemployment?," CEPR Discussion Papers 5057, C.E.P.R. Discussion Papers.
  2. 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.
  3. 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.
  4. 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.
  5. Samuel Bentolila & Juan F. Jimeno, . "Spanish Unemployment: The End of the Wild Ride?," Working Papers 2003-10, FEDEA.
  6. 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.
  7. 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.
  8. Roberto Bande & Melchor Fernandez & Víctor Manuel Montuenga, 2005. "Regional Unemployment in Spain - Disparities, Business Cycle and Wage Setting," ERSA conference papers ersa05p489, European Regional Science Association.
  9. Geroski, Paul A, 1989. "Entry, Innovation and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 572-78, November.
  10. 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.
  11. Namkee Ahn & Juan Ramón García & Juan F. Jimeno, . "Well-being Consequences of Unemployment in Europe," Working Papers 2004-11, FEDEA.
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