Creative Unemployment

Knut Røed () and Jens Fredrik Skogstrøm ()
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Jens Fredrik Skogstrøm: Ragnar Frisch Centre for Economic Research

No 5373, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We examine the impact of job loss on entrepreneurship behavior in Norway. Our identification strategy relies on the use of mass layoffs caused by bankruptcies as indicators of exogenous displacement. We find that working in a company which is going to close down due to bankruptcy during the next four years raises the subsequent entrepreneur rate by 3.7 percentage points (155 %) for men and 1.8 percentage points (180 %) for women, compared to working in a stable firm. These estimates are much larger than what has previously been reported in the literature. Taking into account that many workers lose their jobs in the comparison group of stable firms also, we reckon that the full effects of displacement are even larger.

Keywords: unemployment; entrepreneurship; self-employment (search for similar items in EconPapers)
JEL-codes: J65 L26 M13 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-12
New Economics Papers: this item is included in nep-ent and nep-lab
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Citations: View citations in EconPapers (2)

Published - revised version published as 'Job loss and Entrepreneurship' in: Oxford Bulletin of Economics and Statistics, 2014, 76 (5), 727-744

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