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The Relation between Economic Development and Business Ownership revisited

Author

Listed:
  • Martin Carree

    (University of Maastricht)

  • André van Stel

    () (EIM, Zoetermeer, Cranfield University School of Management, and Erasmus Universiteit Rotterdam)

  • Roy Thurik

    () (Erasmus School of Economics, Erasmus Universiteit Rotterdam; EIM, Zoetermeer, Cranfield University School of Management, and Max Planck Institute of Economics, Jena, Germany)

  • Sander Wennekers

    (EIM, Zoetermeer, and Erasmus Universiteit Rotterdam)

Abstract

This paper revisits the two-equation model of Carree, van Stel, Thurik and Wennekers (2002) where deviations from the ‘equilibrium’ rate of business ownership play a central role determining both the growth of business ownership and that of economic development. Two extensions of the original setup are addressed: using longer time series of averaged data of 23 OECD countries (up to 2004) we can discriminate between different functional forms of the ‘equilibrium’ rate and we allow for different penalties for being above or under the ‘equilibrium’ rate. The additional data do not provide evidence of a superior statistical fit of a U-shaped ‘equilibrium’ relationship when compared to an L-shaped one. There appears to be a growth penalty for having too few business owners but not so for having too many.

Suggested Citation

  • Martin Carree & André van Stel & Roy Thurik & Sander Wennekers, 2007. "The Relation between Economic Development and Business Ownership revisited," Tinbergen Institute Discussion Papers 07-022/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20070022
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    References listed on IDEAS

    as
    1. Andreas Freytag & Roy Thurik, 2010. "Entrepreneurship and its Determinants in a Cross-Country Setting," Springer Books, in: Andreas Freytag & Roy Thurik (ed.), Entrepreneurship and Culture, chapter 0, pages 157-170, Springer.
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    5. Nobuyuki Harada, 2005. "Potential Entrepreneurship in Japan," Small Business Economics, Springer, vol. 25(3), pages 293-304, October.
    6. 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.
    7. Sander Wennekers & Andre van Stel & Niels Noorderhaven & Roy Thurik, 2004. "The Role Of Dissatisfaction And Per Capita Income In Explaining Self-Employment Across 15 European Countries," Papers on Entrepreneurship, Growth and Public Policy 2004-11, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    8. Magnus Henrekson, 2005. "Entrepreneurship: a weak link in the welfare state?," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 437-467, June.
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    11. Sander Wennekers & André Stel & Roy Thurik & Paul Reynolds, 2008. "Nascent entrepreneurship and the level of economic development," Small Business Economics, Springer, vol. 30(3), pages 325-325, March.
    12. Andre van Stel, "undated". "COMPENDIA: Harmonizing business ownership data across countries and over time," Papers on Entrepreneurship, Growth and Public Policy 2005-05, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
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    16. Schultz, T Paul, 1990. "Women's Changing Participation in the Labor Force: A World Perspective," Economic Development and Cultural Change, University of Chicago Press, vol. 38(3), pages 457-488, April.
    17. Ulrike Muehlberger & Silvia Pasqua, 2006. "The “Continuous Collaborators” in Italy. Hybrids between Employment and Self-employment?," CHILD Working Papers wp10_06, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
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    More about this item

    Keywords

    entrepreneurship; economic development; economic growth; business ownership;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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