Self-Employment and Economic Performance: A Geographically Weighted Regression Approach for European Regions

Katharina Pijnenburg

No 1272, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The self-employment rate includes entrepreneurs out of opportunity and entrepreneurs out of necessity. While the effect of opportunity entrepreneurs on economic development should be positive, there should be no or a negative effect of necessity entrepreneurship. We use a geographically weighted regression (GWR) approach to analyze whether the effect of self-employment on economic development is heterogeneous across European NUTS-2 regions. We find that regions having a significant positive effect of self-employment on economic development in the GWR estimation have, on average, a lower self-employment rate than regions with a significant negative effect. The concept of equilibrium rate of entrepreneurship is applied in an attempt to estimate a level of the self-employment rate from which relatively more entrepreneurs are self-employed out of necessity than out of opportunity. We find that in regions where the self-employment rate is above the equilibrium rate, self-employment has indeed a negative effect, while in regions where it is below the equilibrium rate the effect is positive.

Keywords: self-employment; economic performance; geographically weighted regression (search for similar items in EconPapers)
JEL-codes: C21 L26 R11 (search for similar items in EconPapers)
Pages: 33 p.
Date: 2013
New Economics Papers: this item is included in nep-ent and nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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