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Entrepreneurship, Labor Market Mobility and the Role of Entrepreneurial Insurance

Alexandre Gaillard () and Sumudu Kankanamge

No 18-929, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper introduces a quantitative model with risky entrepreneurship and search frictions matching the occupational flows between entrepreneurship, paid-employment, and unemployment. We account for the general shape of these flows and key entrepreneurial and labor market features based mostly on micro CPS and SCF data. Using this model, we show that an insurance providing Self-Employment Assistance (SEA) policy mitigates the bias disfavoring self-employment inherent in unemployment insurance programs. Moreover, ability-dependent SEA programs select more productive and wealthier new entrepreneurs out of unemployment. Finally, we show that the interaction between UI design and SEA programs has a significant impact on entrepreneurship.

Keywords: entrepreneurship; labor market mobility; unemployment; insurance; SEA (search for similar items in EconPapers)
JEL-codes: E24 E61 J68 (search for similar items in EconPapers)
Date: 2018-06, Revised 2019-01
New Economics Papers: this item is included in nep-dge, nep-ent, nep-ias, nep-lab and nep-mac
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