Entrepreneurship, Welfare Provision and Unemployment: Relationships Between Unemployment, Welfare Provision, and Entrepreneurship in Thirty-Seven Nations Participating in the Global Entrepreneurship Monitor (GEM) 2002

21 Pages Posted: 12 Aug 2007 Last revised: 5 Mar 2008

See all articles by Marc Cowling

Marc Cowling

University of Sussex - Institute for Employment Studies

William D. Bygrave

Babson College - Arthur M. Blank Center for Entrepreneurship

Abstract

This paper studies the relationship between entrepreneurship and unemployment. We focus on Necessity TEA (total entrepreneurial activity for those individuals pushed into entrepreneurship because they have no better alternatives for work). We a priori predict that when unemployment is high, TEA (necessity) will be high as outside alternatives in the labor market diminish. Yet we also predict that this effect will be moderated in nations where unemployment benefits are high. In addition we focus on the composition of the stock of unemployed and how difficult, or easy, it is to start a new business. Both factors have been shown to be important in previous studies (Cowling and Mitchell, 1997; Robson, 1998). Our findings offer some support for our a priori predictions, but show that the unemployment effect is far more complex than previously believed.

Suggested Citation

Cowling, Marc and Bygrave, William D., Entrepreneurship, Welfare Provision and Unemployment: Relationships Between Unemployment, Welfare Provision, and Entrepreneurship in Thirty-Seven Nations Participating in the Global Entrepreneurship Monitor (GEM) 2002. Comparative Labor Law & Policy Journal, Vol. 28, No. 4, 2007; Babson College Center for Entrepreneurship Research Paper No. 2008-02. Available at SSRN: https://ssrn.com/abstract=1006267

Marc Cowling

University of Sussex - Institute for Employment Studies ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

William D. Bygrave (Contact Author)

Babson College - Arthur M. Blank Center for Entrepreneurship ( email )

231 Forest Street
Babson Park, MA 02457-0310
United States

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