Unemployment Benefits and Entrepreneurship

7 Pages Posted: 21 Feb 2014

See all articles by Hamid Beladi

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics

Saibal Kar

Centre for Studies in Social Sciences, Calcutta; Institute of Labor Economics (IZA)

Date Written: March 2014

Abstract

Several recent empirical papers show that unemployment benefits crowd out nascent entrepreneurs. In the present paper provide theoretical support in favour of this interesting result. Over fairly general preference patterns we obtain a measure of the opportunity cost of entrepreneurs in the presence of unemployment benefits and derive conditions under which potential entrepreneurs suffer as unemployment benefits rise. We formulate a clear transmission mechanism in the labour market that links unemployment benefits to occupational choice for a group of riskā€averse individuals.

JEL Classification: J23, J65, M13

Suggested Citation

Beladi, Hamid and Kar, Saibal, Unemployment Benefits and Entrepreneurship (March 2014). Japanese Economic Review, Vol. 65, Issue 1, pp. 122-128, 2014. Available at SSRN: https://ssrn.com/abstract=2399262 or http://dx.doi.org/10.1111/jere.12023

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics ( email )

One UTSA Circle
P.O. Box 5636
San Antonio, TX 78249
United States
210-458-7038 (Phone)
210-458-7040 (Fax)

Saibal Kar

Centre for Studies in Social Sciences, Calcutta ( email )

R-1, Baishnabghata Patuli Township
Calcutta, 700 094
India
91-33-2462 7252 (Phone)
91-33-2462 6183 (Fax)

HOME PAGE: http://www.cssscal.org

Institute of Labor Economics (IZA) ( email )

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

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