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Economic Behavior, Economic Freedom, and Entrepreneurship

Economic Behavior, Economic Freedom, and Entrepreneurship

Edited by Richard J. Cebula, Joshua Hall, Franklin G. Mixon Jr and James E. Payne

Expert editors add to an important field of research, the economics of entrepreneurship, and explore how institutions influence entrepreneurial behavior. This book provides comprehensive and contemporary insights into the interaction between economic behavior of firms and households, economic freedom, and entrepreneurship, and how it generates an environment with greater opportunities for growth and development for individuals, households, and private-sector firms.

Chapter 21: The US entrepreneurship–unemployment nexus

James E. Payne

Subjects: economics and finance, austrian economics, economics of entrepreneurship, political economy


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.

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