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Norwegian

Job Loss and Entrepreneurship

Link to article:

[DOI] [PDF]

Authors:

Røed, Knut and Jens Fredrik Skogstrøm

Year:

2014

Reference:

Oxford Bulletin of Economics & Statistics

Volume 76, Issue 5, Pages: 727-744

Summary

We examine the impact of job loss on entrepreneurship behaviour. Our identification strat-egy relies on the use of mass layoffs caused by bankruptcies as indicators of exogenous displacement. Building on Norwegian register data, we find that working in a company which is going to close down due to bankruptcy in the near future raises the subsequent entrepreneur propensity by 155 % for men and 180 % for women, compared to working in a stable firm. These estimates are much larger than previously reported in the literature. Taking into account that many workers lose their jobs in the comparison group of stable firms also, we suggest that the full effects of displacement are even larger.

JEL:

L26, J65, M13

Keywords:

Entrepreneurship, Self-employment, Unemployment

Project:

Oppdragsgiver: Norges forskningsråd
Oppdragsgivers prosjektnr.: 201336
Frisch prosjekt: 6513 - Entrepreneurship and Gender in Norway - Entrepreneurship, Gender, and Social capital