This study extends the recent literature on the causal dynamics between entrepreneurship and the unemployment rate in the case of the U.S. Using higher frequency data than previous studies, the results indicate the absence of a long-run (co-integrated) relationship between both aggregated and disaggregated self-employment rates and the unemployment rate. VAR models in first-differences, recognizing the presence of recessionary periods, reveal unidirectional causality from the respective self-employment rates to the unemployment rate. However, the magnitude of the impact of overall self-employment is marginally insignificant with respect to the unemployment rate with the impact different between incorporated and unincorporated self-employment.
James E. Payne
Rajeev K. Goel, Michael A. Nelson and James E. Payne
This study extends the existing literature on the role of economic freedom on entrepreneurship by employing the Global Entrepreneurship and Development Index (GEDI). Unlike other indices/measures of entrepreneurship, the GEDI takes into account both individual and institutional factors that influences entrepreneurial performance within a country. Using a cross-section of 72 countries, we find that a country’s GDP and level of education each yield a positive and statistically significant impact on entrepreneurship. Surprisingly, both the level of democracy and the degree of trade openness did not yield a statistically significant impact on the level of entrepreneurship. While the overall level of economic freedom has a positive and statistically significant influence on entrepreneurship, the results for several components of economic freedom provided varying results. While size of government and monetary freedom are statistically insignificant, regulation renders a positive and statistically significant impact on entrepreneurship.