Job Creation and the Self-employed Firm Size: evidence from Spain
Emilio Congregado (),
Vicente Esteve () and
Antonio Golpe ()
No 1202, Working Papers from Department of Applied Economics II, Universidad de Valencia
Over the last decade, Spain created more jobs than any other country in Europe; however, now it is destroying them at an equal pace. Nevertheless, the relationship between the level of employment and the level of self-employment has remained relatively stable. In this context, there is a considerable policy interest in the way in which the self-employed firm in Spain creates and destroys employment, i.e., in the role of the self-employed as creators of additional job opportunities. This paper provides evidence of the existence of a long-term relationship between the self-employed firm that hires external labor and employees hired by third parties in Spain, while accounting for the existence of an abrupt shift in the size of self-employed firms during the previous crisis (1991 to 1993). These findings are qualified testing whether this relationship is time-dependent. Our results suggest that the null hypothesis of linear cointegration would be rejected in favor of a two-regime threshold cointegration model, that is, in favor of a time-sensitive relationship with two opposite regimes. These two regimes differ in the way that the two components of the self-employed firm size respond to restore equilibrium. In this paper, alternative rationales for explaining these findings are also discussed.
Keywords: Self-employed firm size; Entrepreneurship; Job Creation; Cointegration; Self-employment; Structural Break; Threshold cointegration (search for similar items in EconPapers)
JEL-codes: C12 C22 C32 J23 M13 (search for similar items in EconPapers)
Pages: 26 pages
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Persistent link: https://EconPapers.repec.org/RePEc:eec:wpaper:1202
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