Does self-employment reduce unemployment?

Roy Thurik, MA Carree, Andre van Stel, DB (David) Audretsch

Research output: Contribution to journalArticleAcademicpeer-review

367 Citations (Scopus)

Abstract

This paper investigates the dynamic relationship between self-employment and unemployment rates. On the one hand, high unemployment rates may lead to start-up activity of self-employed individuals (the “refugee” effect). On the other hand, higher rates of self-employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods (the “entrepreneurial” effect). This paper introduces a new two-equation vector autoregression model capable of reconciling these ambiguities and estimates it for data from 23 OECD countries between 1974 and 2002. The empirical results confirm the existence of two distinct relationships between unemployment and self-employment: the “refugee” and “entrepreneurial” effects. We also find that the “entrepreneurial” effects are considerably stronger than the “refugee” effects.
Original languageEnglish
Pages (from-to)673-686
Number of pages14
JournalJournal of Business Venturing
Volume23
Issue number6
DOIs
Publication statusPublished - 2008

Fingerprint

Dive into the research topics of 'Does self-employment reduce unemployment?'. Together they form a unique fingerprint.

Cite this