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http://ssrn.com/abstract=775830
 
 

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Does Self-Employment Reduce Unemployment?


David B. Audretsch


Indiana University - Institute for Development Strategies; King Saud University; WHU - Otto Beisheim School of Management; Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Martin A. Carree


University of Maastricht - Department of Organization & Strategy

Roy Thurik


Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC); Erasmus Research Institute of Management (ERIM); EIM Netherlands - Business and Policy Research; Tinbergen Institute

Andre J. Van Stel


Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

May 2005

CEPR Discussion Paper No. 5057

Abstract:     
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.

Number of Pages in PDF File: 17

Keywords: Entreprenuership, Gibrat's Law

JEL Classification: L11, M13

working papers series


Date posted: August 3, 2005  

Suggested Citation

Audretsch, David B. and Carree, Martin A. and Thurik, Roy and van Stel, Andre J., Does Self-Employment Reduce Unemployment? (May 2005). CEPR Discussion Paper No. 5057. Available at SSRN: http://ssrn.com/abstract=775830

Contact Information

David B. Audretsch (Contact Author)
Indiana University - Institute for Development Strategies ( email )
1315 East Tenth Street
Bloomington, IN 47405
United States
812-855-6766 (Phone)
812-855-0184 (Fax)
King Saud University ( email )
Riyadh, 11451
Saudi Arabia
WHU - Otto Beisheim School of Management ( email )
Burgplatz 2
Vallendar, 56179
Germany
Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )
1315 East Tenth Street
Bloomington, IN 47405
United States

Martin A. Carree
University of Maastricht - Department of Organization & Strategy ( email )
P.O. Box 616
Maastricht, 6200 MD
Netherlands
Roy Thurik
Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC) ( email )
3000 DR Rotterdam
Netherlands
+31 10 408 2232 (Phone)
+31 10 408 9146 (Fax)
HOME PAGE: http://www.thurik.com
Erasmus Research Institute of Management (ERIM) ( email )
P.O. Box 1738
3000 DR Rotterdam
Netherlands
EIM Netherlands - Business and Policy Research
Postbus 7001
2701 AA Zoetermeer
Netherlands
+31 79 341 3634 (Phone)
+31 79 331 3742 (Fax)
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
Andre J. Van Stel
Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )
Kahlaische Strasse 10
D-07745 Jena, 07745
Germany
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