Does Self-Employment Reduce Unemployment?

David Audretsch, Roy Thurik, Martin Carree and André van Stel

No 5057, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper investigates the dynamic relationship between self-employment and unemployment rates. On the one hand, high unemployment rates may lead to start-up activity of self-employed individuals (the 'refugee' effect). On the other hand, higher rates of self employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods (the 'entrepreneurial' effect). This paper introduces a new two-equation vector autoregression model capable of reconciling these ambiguities and estimates it for data from 23 OECD countries between 1974 and 2002. The empirical results confirm the existence of two distinct relationships between unemployment and self-employment: the 'refugee' and 'entrepreneurial' effects. We also find that the 'entrepreneurial' effects are considerably stronger than the 'refugee' effects.

Keywords: Unemployment; Self-employment; Entreprenuership (search for similar items in EconPapers)
JEL-codes: J23 J64 L26 L53 M13 O11 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-ent and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Downloads: (external link)
https://cepr.org/publications/DP5057 (application/pdf)

Related works:
Journal Article: Does self-employment reduce unemployment? (2008)
Working Paper: Does Self-Employment Reduce Unemployment? (2007)
Working Paper: Does Self-Employment reduce Unemployment? (2007)
Working Paper: Does Self-Employment Reduce Unemployment? (2006)
Working Paper: Does Self-Employment Reduce Unemployment? (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5057

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5057

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().