Regional unemployment structure and new firm formation

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Does regional unemployment increase or rather decrease entrepreneurial activity? Although this question has been hotly debated among researchers for decades the answers yielded so far are ambiguous and inconclusive. The paper proposes an innovative approach that takes not only interregional differences in unemployment rates, but also in unemployment duration and the human capital of the unemployed-i.e. in the structure of regional unemployment-into account. Both, the skill structure of the unemployed and the share of long-term unemployment are found to have an important impact on regional start-up activity. Moreover, the impact of unemployment structure on new firm formation is found to vary with the knowledge-intensity of the start-ups. Terms of use: Documents in EconStor may

The post-crisis growth in the self-employed: volunteers or reluctant recruits?

“…The second feature is that controlling for inactivity duration increases the size and significance (to a level of 7%) of the positive association between the unemployment rate and the probability of transition for men. This suggests that there may be a slight net "push" effect into self-employment for men who are only recently unemployed, supporting the finding in Audretsch et al (2014).…”

“…However, the regional economics literature argues that entrepreneurial opportunities are less prevalent in localities where unemployment is higher, because higher unemployment correlates with lower economic demand and therefore business opportunity (Storey, 1991;Reynolds et al, 1994). The question of the relative importance of "prosperity-pull" and "recession-push" effects is one that dominates extant research on the relationship between entrepreneurial activity and unemployment, and figures significantly in discussion on the spatial variation in self-employment and new firm formation (see Audretsch et al, 2014). 3 It has been noted on many occasions that there is no clear-cut empirical relationship here, reflecting the theoretical ambiguity (Armington and Acs, 2002;Thurik et al, 2008;Parker, 2009;Audretsch et al, 2014).…”

“…7 In the case of those who are in employment rather than inactive this number is set to zero. The purpose of this is to investigate the finding recently reported by Audretsch et al (2014) that it is long-term unemployment rather than unemployment per se that has an adverse impact on new firm formation. The results reported are for a pooled probit estimation because in this case the error component correlation is not significantly different from zero.…”

“…The question of the relative importance of "prosperity-pull" and "recession-push" effects is one that dominates extant research on the relationship between entrepreneurial activity and unemployment, and figures significantly in discussion on the spatial variation in self-employment and new firm formation (see Audretsch et al, 2014). 3 It has been noted on many occasions that there is no clear-cut empirical relationship here, reflecting the theoretical ambiguity (Armington and Acs, 2002;Thurik et al, 2008;Parker, 2009;Audretsch et al, 2014).…”

“…Of course, in reality, actual self-employment may also turn out to be unrewarding, unsatisfying and insecure (D'Arcy and Gardiner, 2014;Hatfield, 2015). Audretsch et al (2014) make an important observation that current local unemployment rates mask heterogeneity about local labour market conditions, in particular the extent to which local variation in the skill levels of the unemployed, as well as variation in spell duration, reveals information about their ability to compete for available jobs, and therefore experience lower "push" towards self-employment. Recent post-crisis UK labour market experience has been notable because unemployment rates have not risen as far and as fast as in previous periods of recession or as in other larger European economies, and therefore led to significant unemployment duration dependency.…”