Displacement and self-employment entry

Jenny von Greiff

Labour Economics, 2009, vol. 16, issue 5, 556-565

Abstract: Displacement is expected to decrease the reservation wage of self-employment by decreasing earnings in paid employment and increasing the probability of unemployment. This paper examines whether displacement increases the probability of self-employment using propensity score matching on Swedish register-based data. The data include all individuals displaced due to plant closures in 1987 and 1988, and a random sample of 200,000 employed individuals. The results suggest that displacement almost doubles the probability of entering self-employment the year after displacement. A sub-sample analysis indicates that individuals with a potentially worse position on the labor market react more strongly to displacement in terms of entering self-employment.

Keywords: Displacement; Self-employment; Plant; closure; Propensity; score; matching (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (44)

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