Entrepreneurship among the Unemployed: the Effect of Unemployment Benefit

References

Chat With PDF

Cite

Share

Abstract

This paper probes the drivers and constraints that affect an unemployed individual's decision to start a business. Using linear probability model and survival analysis, we find that unemployment benefits have a significantly negative effect on switching from unemployment to self-employment and a positive effect on the duration before the switch, especially on the unincorporated self-employment. Moreover, unemployed individuals are less likely to start a business after being laid off, if their spouse does not have a job or most people expect the unemployment rate to go down in the coming 12 months.