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Modelling Entrepreneurship

Author

Listed:
  • Niels Bosma

    (EIM Business and Policy Research, Zoetermeer)

  • Gerrit de Wit

    (EIM Business and Policy Research, Zoetermeer)

  • Martin Carree

    (University of Maastricht and Erasmus University Rotterdam)

Abstract

Two approaches can be distinguished with respect to modelling entrepreneurship: (i) the approachfocusing on the net development of the number of entrepreneurs in an equilibrium framework and (ii)the approach focusing on the entries and exits of entrepreneurs. In this paper we unify these ap-proaches to arrive at a model explaining the equilibrium and actual number of entrepreneurs and theentry and exit rate of entrepreneurs simultaneously and consistently. We apply our unified approach tothe Netherlands using self-employment data for the 1960-99 period. We find error-correction of about20% per year and a very different situation in terms of disequilibrium before and after the early 1980's.Periods of high unemployment appear to be characterized by both high entry and high exit rates.

Suggested Citation

  • Niels Bosma & Gerrit de Wit & Martin Carree, 2003. "Modelling Entrepreneurship," Tinbergen Institute Discussion Papers 03-014/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20030014
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    More about this item

    Keywords

    self-employment; entry; exit.;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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