How do local labor market conditions and individual characteristics affect quitting selfemployment?

Dirk Oberschachtsiek

No P 2010-001, Discussion Papers, Presidential Department from WZB Berlin Social Science Center

Abstract: This paper investigates the joint effect of local labor market conditions and individual differences on the duration of self-employment periods. Using register based, data the study focuses on previously unemployed business founders who have received public support to realize their entrepreneurial activities. Local labor market conditions account for a high level of complexity while personal characteristics are related to the founder's employment background. Using accelerated failure time models, controlling for unobserved heterogeneity and allowing for competing exit risk we find that higher and increasing local labor market pressure decreases the duration in self-employment whereas higher perceived (re-unemployment) risk and lower economic prosperity for incumbent firms reduce exit risks. The results reveal that the effect of external conditions is multidimensional and non-linear. On the individual level, we find strong support for the hot-house hypothesis for gaining comparative advantages.

Keywords: self-employment; duration; competing risk; local labor market situation (search for similar items in EconPapers)
JEL-codes: C41 J62 J64 L26 M13 R23 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbpre:p2010001

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