2005
Does self-employment reduce unemployment
Publication
Publication
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 unemployment and self-employment, i.e. ‘refugee’ and ‘entrepreneurial’ effects. We also find that the ‘entrepreneurial’ effects are considerably stronger than the ‘refugee’ effects.
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Centre for Economic Policy Research, London | |
hdl.handle.net/1765/9822 | |
Centre for Economic Policy Research. Discussion Papers | |
Organisation | Erasmus School of Economics |
Audretsch, D., Carree, M., van Stel, A., & Thurik, R. (2005). Does self-employment reduce unemployment. Centre for Economic Policy Research. Discussion Papers. Retrieved from http://hdl.handle.net/1765/9822 |