Does Self-Employment Reduce Unemployment?

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

Papers on Entrepreneurship, Growth and Public Policy from Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group

Abstract: This paper investigates the dynamic interrelationship between self-employment and unemployment rates. On the one hand, unemployment rates may stimulate start-up activity of self-employed. On the other hand, higher rates of self-employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods. These two effects have resulted in considerable ambiguities about the interrelationship between unemployment and entrepreneurial activity. This paper introduces a two-equation vector autoregression model capable of reconciling these ambiguities and tests it for data of 23 OECD countries over the period 1974-2002. The empirical results confirm the two distinct relationships between unemploy-ment and self-employment, i.e. "refugee" and "entrepreneurial" effects. We also find that the "entrepreneu-rial" effects are considerably stronger than the "refugee" effects.

Keywords: entrepreneurship; Gibrat's Law; self-employment; unemployment (search for similar items in EconPapers)
JEL-codes: L11 M13 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2006-05
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 (8)

Downloads: (external link)
ftp://papers.econ.mpg.de/egp/discussionpapers/2005-07.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Failed to connect to FTP server papers.econ.mpg.de: No such host is known.

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? (2005)
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:esi:egpdis:2005-07

Ordering information: This working paper can be ordered from
http://www.econ.mpg. ... arch/EGP/discuss.php

Access Statistics for this paper

More papers in Papers on Entrepreneurship, Growth and Public Policy from Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group Contact information at EDIRC.
Bibliographic data for series maintained by Kerstin Schück ( this e-mail address is bad, please contact ).