Entrepreneurship and Unemployment: Relationships between Unemployment and Entrepreneurship in 37 Nations Participating in the Global Entrepreneurship Monitor (GEM) 2002

12 Pages Posted: 24 Mar 2011

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

Date Written: 2003

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.

Keywords: Entrepreneurship

JEL Classification: M13

Suggested Citation

Cowling, Marc and Bygrave, William D., Entrepreneurship and Unemployment: Relationships between Unemployment and Entrepreneurship in 37 Nations Participating in the Global Entrepreneurship Monitor (GEM) 2002 (2003). Babson College, Babson Kauffman Entrepreneurship Research Conference (BKERC), 2002-2006. Available at SSRN: https://ssrn.com/abstract=1783690

Marc Cowling (Contact Author)

University of Sussex - Institute for Employment Studies ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

William D. Bygrave

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

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

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