CAUSAL RELATIONSHIPS BETWEEN ENTREPRENEURSHIP, UNEMPLOYMENT AND ECONOMIC GROWTH IN SELECTED COUNTRIES

Ali Davari, Leila Sefidbari, Mehdi Khazaei (), Kamal Sakhdari and Yeganeh Mousavi Jahromi
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Ali Davari: University of Tehran, Tehran, Iran
Leila Sefidbari: Islamic Azad University, Qazvin, Iran
Mehdi Khazaei: University of Tehran, Tehran, Iran
Kamal Sakhdari: University of Tehran, Tehran, Iran
Yeganeh Mousavi Jahromi: Payam-e-Noor University, Tehran, Iran

Journal of Developmental Entrepreneurship (JDE), 2022, vol. 27, issue 03, 1-30

Abstract: While the aggregate positive effects of entrepreneurship are assumed in many studies, there is a lack of empirical support for such assumptions. This study investigates the causal relationship between entrepreneurship, economic growth and unemployment. We also examine how a shock in one variable may influence other variables and the length of the effect. The findings of panel data from 39 countries collected between 2006 and 2016 using the Granger-causality test indicate a unidirectional causal effect of economic growth on entrepreneurship and unemployment. However, despite their correlation, no causal link was found between entrepreneurship and unemployment. The analysis of impulse-response functions also shows that only shocks from the entrepreneurship indicator are permanent in the model. Variance decomposition results reveal that the most important factor causing changes in entrepreneurship is the entrepreneurship indicator itself, implying that only specific entrepreneurial policies can affect the entrepreneurship indicator’s components and improve this indicator.

Keywords: Entrepreneurship; unemployment; economic growth; impulse response function (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S1084946722500200

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