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Does Self-Employment Measure Entrepreneurship? Evidence from Great Britain

Giulia Faggio () and Olmo Silva ()

SERC Discussion Papers from Spatial Economics Research Centre, LSE

Abstract: Research on entrepreneurship often uses information on self-employment to proxy for business creation and innovative behaviour. However, little evidence has been collected on the link between these measures. In this paper, we use data from the UK Labour Force Survey (LFS) combined with data from the Business Structure Database (BSD), and the Community Innovation Survey (CIS) to study the relation between self-employment, business creation and innovation. In order to do so, we aggregate individual and firm-level data at the Travel-to-Work Area (TTWA) and investigate how the incidence of self-employment correlates with the density of business start-ups and innovative firms. Our results show that in urban areas a higher incidence of self-employment positively and strongly correlates with more business creation and innovation, but this is not true for rural areas. Further analysis suggests that this urban/rural divide is related to lack of employment opportunities in rural areas, which might push some workers into self-employment as a last resort option.

Keywords: Entrepreneurship; self-employment; spatial distribution (search for similar items in EconPapers)
JEL-codes: J21 L26 R12 R23 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-ent, nep-eur, nep-lab, nep-sbm and nep-ure
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