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Rising Inequality and Entrepreneurship during Economic Downturn: An Analysis of Opportunity and Necessity Entrepreneurship in Spain

María-Teresa Aceytuno (), Celia Sánchez-López () and Manuela A. de Paz-Báñez ()
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María-Teresa Aceytuno: Facultad de Ciencias Empresariales, University of Huelva, 21004 Huelva, Spain
Celia Sánchez-López: Facultad de Ciencias Empresariales, University of Huelva, 21004 Huelva, Spain
Manuela A. de Paz-Báñez: Facultad de Ciencias Empresariales, University of Huelva, 21004 Huelva, Spain

Sustainability, 2020, vol. 12, issue 11, 1-16

Abstract: There is a consensus among researchers that one of the most important effects of the recent economic downturn that started in 2009—also known as the Great Recession—in Spain has been rising income inequality. In this context, researchers are concerned about the effects of inequality on the economy, and this concern is even more marked now, when the world is facing a new crisis that seems the equal of, or even more devastating than the last Great Recession as a consequence of Covid-19. Nevertheless, there is a lack of studies which consider the effects of inequality on entrepreneurship. This paper aims to contribute to a deeper understanding of the relationship between inequality and entrepreneurship in the context of an economic downturn. We focus on the 17 autonomous communities in Spain during the Great Recession (2007–2013). Using unbalanced panel data, we study the effect on entrepreneurial activity, differentiating between total, necessity- and opportunity-driven entrepreneurship. The contribution of this paper is twofold. First, our results offer new empirical evidence concerning the relationship between growing inequality and entrepreneurial activity, showing significant differences from results in the existing literature. Second, we explain how, in a recessionary context of highly restricted financial resources, inequality can negatively affect total, necessity- and opportunity-based entrepreneurship, preventing a large part of the population from engaging in this activity.

Keywords: income inequality; Spanish regions; entrepreneurship; entrepreneurial motivation; economic crisis (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2020
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