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Entrepreneurship and Institutions

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Comparative Labor Law & Policy Journal, Vol. 28, No. 4, 2007

In this paper entrepreneurs are defined as agents who bring about economic change by combining their own effort with other factors of production in search of economic rents. The institutional setup is argued to determine both the supply and direction of entrepreneurial activity. Four key institutions are explored more closely: property rights protection, savings policies, taxation, and the regulation of labor markets. Institutions have far-reaching effects on entrepreneurship, and they largely determine whether or not entrepreneurial activity will be socially productive. Due to the responsiveness of entrepreneurship to the institutional setup it is maintained that in-depth analyses of specific institutions are required in order to further our understanding of the determinants of entrepreneurial behavior and the economic effects of entrepreneurship. The paper also demonstrates that it is problematic to use self-employment as an empirical proxy for productive entrepreneurship.

Number of Pages in PDF File: 26

Keywords: entrepreneurship, industrial policy, innovation, institutions, labor security, property rights, regulation, self-employment, tax policy

JEL Classification: H32, L5, L25, M13, O31, P14

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Date posted: August 12, 2007 ; Last revised: February 22, 2015

Suggested Citation

Henrekson, Magnus, Entrepreneurship and Institutions. Comparative Labor Law & Policy Journal, Vol. 28, No. 4, 2007. Available at SSRN: http://ssrn.com/abstract=1006253

Contact Information

Magnus Henrekson (Contact Author)
Research Institute of Industrial Economics (IFN) ( email )
P.O. Box 55665
Grevgatan 34
Stockholm, SE-10215
+46-8-6654502 (Phone)
+46-8-6654599 (Fax)
HOME PAGE: http://www.ifn.se/mh
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