Entrepreneurship, Asymmetric Information and Unemployment

Robin Boadway, Nicolas Marceau, Maurice Marchand () and Marianne Vigneault ()
Additional contact information
Maurice Marchand: IAG, Universite Catholique de Louvain, and CORE
Marianne Vigneault: Department of Economics, Bishop's University

No 57, Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal

Abstract: We examine how three sources of asymmetric information affect the supply of entrepreneurs and unemployment. In the first case, banks cannot observe entrepreneurs' risk of failure so ration credit. This increases the number of entrepreneurs and the level of unemployment. In the second case, firms cannot observe workers' effort so offer a wage above the market clearing one. This results in unemployment and too few entrepreneurs. The final case arises when firms cannot observe workers' abilities. A pooling wage is offered and results in too many entrepreneurs. The role of government in restoring efficiency is explored

Dans ce texte, nous étudions l'impact de trois formes d'asymétrie d'information sur l'entrepreneurship et le chômage. Dans le premier cas, les banques ne peuvent observer la probabilité qu'un entrepreneur fasse faillite, ce qui les conduit à restreindre l'accès au crédit. Cela cause un accroissement du nombre d'entrepreneurs et du chômage. Dans un deuxième cas, les firmes ne peuvent observer l'effort de leurs travailleurs et offrent alors un salaire d'efficience. D'un tel salaire résulte du chômage et un trop petit nombre d'entrepreneurs. Dans le dernier cas, les firmes ne peuvent observer l'habileté de leurs travailleurs. Un même salaire est alors offert à tous les travailleurs, ce qui conduit à un trop grand npmbre d'entrepreneurs. Nous étudions les formes d'intervention gouvernementale permettant d'accroître l'efficacité.

Keywords: entrepreneurship; unemployment; occupational choice (search for similar items in EconPapers)
JEL-codes: H2 J6 M13 (search for similar items in EconPapers)
Pages: 31 pages
Date: 1998-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Journal Article: Entrepreneurship, Asymmetric Information, and Unemployment (1998)
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