The Dynamics of Entrepreneurship: Hysteresis, Business Cycles and Government Policy

32 Pages Posted: 7 Apr 2009 Last revised: 13 Sep 2024

See all articles by Emilio Congregado

Emilio Congregado

University of Huelva

Antonio A. Golpe

University of Huelva - Economics and Statistics; University of Huelva

Simon C. Parker

University of Western Ontario; Durham University - Department of Economics and Finance; IZA Institute of Labor Economics

Abstract

This paper estimates an unobserved components model to explore the macro dynamics of entrepreneurship in Spain and the US. We ask whether entrepreneurship exhibits hysteresis, defined as a macro dynamic structure in which cyclical fluctuations have persistent effects on the natural rate of entrepreneurship. We find evidence of hysteresis in Spain, but not the US, while in both countries business cycle output variations significantly affect future rates of entrepreneurship. The article discusses implications of the findings for the design of entrepreneurship policies.

Keywords: self-employment, business cycles, time series models, unobserved components model, hysteresis, entrepreneurship

JEL Classification: C32, E32, J24

Suggested Citation

Congregado, Emilio and Golpe Moya, Antonio Anibal and Golpe Moya, Antonio Anibal and Parker, Simon C., The Dynamics of Entrepreneurship: Hysteresis, Business Cycles and Government Policy. IZA Discussion Paper No. 4093, Available at SSRN: https://ssrn.com/abstract=1373327

Emilio Congregado (Contact Author)

University of Huelva ( email )

Departament of Economics
Plaza de la Merced, 11
Huelva, Huelva 21002
Spain

HOME PAGE: http://www.uhu.es/emilio.congregado

Antonio Anibal Golpe Moya

University of Huelva - Economics and Statistics ( email )

Plaza de la Merced 11
Huelva, Huelva 21071
Spain
0034959217832 (Phone)
0034959217828 (Fax)

University of Huelva ( email )

Huelva
Spain

Simon C. Parker

University of Western Ontario ( email )

1151 Richmond Street
Suite 2
London, Ontario N6A 5B8
Canada

Durham University - Department of Economics and Finance ( email )

23/26 Old Elvet
Durham DH1 3HY
United Kingdom
+44 191 3747271 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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