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|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|3802||2010||15 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Policy Modeling, Volume 32, Issue 6, November–December 2010, Pages 828–842
An often applied labour market policy to combat unemployment is to stimulate unemployed individuals to start their own businesses. Such policy may at least, temporarily lead to increases in self-employment, in particular, in the number of own-account workers. These policies may be called successful when the formerly unemployed individuals remain in employment for a longer period of time either as self-employed or as paid-employed worker and also when they become employers they contribute to reduce unemployment not only by creating their own jobs but also by hiring new employees. In this paper we investigate empirically the long-run relationship between the two components of self-employment over the business cycle and discuss its implications for entrepreneurship policy.
The search of solutions to the unemployment problem at present time is the major issue for governments around the world, particularly in Europe. In that sense, much of the discussion on finding solutions to the unemployment problem has centered on the pivotal role to foster entrepreneurship as a way to reduce unemployment – i.e. as an instrument of active labour market policy (Pfeiffer and Reize, 2000a, Pfeiffer and Reize, 2000b and Reize, 2004). As it is well-known, there are two channels through which self-employment can contribute to reduce unemployment. First, there is a direct effect of removing a newly self-employed individual from the stock of unemployed. Second, there is an indirect effect of eventual job creation by entrepreneurs who succeed in running enterprises which require outside labour. Therefore, new self-employed people are not only viewed as an engine for innovation and economic growth as several empirical and theoretical works suggest1 but also as creators of additional employment opportunities (Carroll et al., 2000 and Cowling et al., 2004). The logic of this conception of the promotion of self-employment as a way to directly reduce unemployment is quite simple: promoting the transition from unemployment to self-employment by using start-up incentives or tax reductions among others such that the relative valuation between self-employment and salaried work is altered in favor to the former. The changes which these incentives introduce into the occupational choice problem's parameters result in some unemployed people reviewing their initial decision and switching to self-employment as a better alternative to face the scarce job opportunities in the labour market. The problem is that policies devised to increase the self-employment rate may attract the worst entrepreneurs2 – i.e. among unemployed people who face-up to lower job-offer arrival rate and even propitiate some ‘unexpected’ transitions from paid employment to self-employment for evading the most onerous elements that Employment protection legislation imposes to firms leading a loss of rights for these workers (Román, Congregado, & Millán, 2009).3 Therefore, and given the current slow-down in the job-offer arrival rate, one could argue that the existence of high levels of unemployment in conjunction with these incentives schemes in a highly regulated labour market should lead to rise in self-employment rates and changes in the relative participation of own-account workers and employers in self-employment. However, more is not necessarily better4 as the majority of people becoming self-employed are not entrepreneurs in the sense of people creating firms that generate both innovation and wealth (Baumol, 2008 and Shane, 2009) but actually some of them are dependent self-employed workers and others are ‘necessity’ entrepreneurs (Henrekson, 2007). Since people who switch from unemployment to self-employment show a lower probability of survival, the promotion of self-employment as a way of combating unemployment will have temporary effects (Millán, Congregado, & Román, 2010); and finally, in most advanced countries only a minority of self-employed people hire other workers5 – i.e. only a minority becomes job creators. Also encouraging more and more people to become self-employed workers in crisis times wont create a lot of jobs because only some of them will be job creators and only a small fraction of them will remain as self-employed when economy recovers. While evaluating policies promoting self-employment one should not only consider short-run but also long-term effects. Since most self-employed people start out without employees – i.e. as own-account workers it is important to know how the number of own-account workers develops. In balance, do the own-account workers remain in own-account work or do they switch status towards employer, unemployed or paid-employee as Lucas (1978) suggests? The more number of own-account workers remain in employment (either paid employed or self-employed), the more successful is the policy program. In this sense assuming that paid-employment jobs are safer and of a more permanent nature than own-account worker jobs (Lucas, 1978), long-term aggregate employment is enhanced when many transitions from own-account worker to wage-employee take place. Research on the determinants of self-employment survival reveals that the probability to leave self-employment for paid-employment increases during boom conditions.6 Hence, in order to reach high employment rates it is important that many own-account workers make the switch to safer employment jobs during boom periods. If not, then once the economy is back in less prosperous phases of the business cycle (in particular recessions), the number of own-account workers may become too high considering that many new individuals try to start businesses in recession periods as well (recession push effect). This may lead to abundance of marginal entrepreneurs and eventually many own-account workers being forced to return to unemployment. To summarize, we expect two opposing effects during different phases of the business cycle. During recessions the number of own-account workers increases due to a lack of paid employment opportunities (recession push effect). During boom periods the number of own-account workers decreases because some of them will succeed in finding (safer) paid jobs. In order for aggregate macro employment rates to improve, the latter effect should be stronger than the former. In this paper we investigate this matter empirically. Specifically, we employ a nonlinear cointegration model where we allow the relation between the own-account workers and self-employment to vary with the business cycle using the employer rate as an indicator of the business cycle. We do so using quarterly time-series data on self-employment rates for Spain. Spain is an adequate candidate for our proposal. On one hand in the current crisis, Spain has destroyed more jobs than any other European country in the third quarter of 2009, the unemployment rate stood at 17.9%, the highest rate in the euro area (EA-16). This phenomenon is not new for Spain where unemployment rate has remained at around 20% during the last two decades of the 20th century. As a reaction to the high number of unemployed people in Spain during the last two decades, the promotion of transitions from unemployment to self-employment has become a classical instrument of active labour market policy.7 On the other hand, Spain has one of the most regulated labour markets in OECD's countries.8 As it is well known, Employment protection legislation may make entrepreneurs less willing to hire new workers and may lead the emergence of dependent self-employed as a way to evade the most onerous elements of the labour regulation. The combination of these elements makes Spain a particular suitable case to study the dynamics of the two components of self-employment. We emphasize that our model does not allow us to directly evaluate policy programs stimulating unemployed individuals to start businesses. However, our study should allow us to shed light on the expected long run effects of these policies and above all about the own-account workers dynamics over the business cycle. Assuming that, on average, paid-employment jobs are safer than own-account worker jobs, chances for (marginal) own-account workers to remain longer in employment increase when they succeed in making the switch to paid-employment. Therefore it is important to gain insight in the relation between the number of employers (an indicator for the business cycle) and the number of own-account workers at the macro level. We find that the number of own-account workers increases when the number of employers is below a threshold. This finding is consistent with the recession-push hypothesis. On the other hand, when the number of employers is relatively high (i.e. in boom periods), the number of own-account workers decreases presumably because some of them find paid-employment jobs offered by employers. However, our estimates indicate that the previous (recession-push) effect is much stronger than the latter effect. This may indicate that in boom periods, very few own-account workers succeed in securing longer term employment by finding paid jobs so that back in less prosperous phases of the business cycle there are too many marginal entrepreneurs, possibly resulting in many own-account workers being forced to return to unemployment. This paper is organized as follows. The next section discusses in greater detail theory and evidence about job creation and business cycles in entrepreneurship. In Section 3 the econometric methodology and data will be presented while Section 4 will account for non-linearity. The final section concludes with a discussion of policy implications and some avenues for future research.
نتیجه گیری انگلیسی
This paper investigated the long-term relationship and the adjustment dynamics between the two components of self-employment, own-account workers and employers using Spanish quarterly data over the period 1987–2004. We studied the dynamic interaction between the self-employment rate and the own-account worker rate using linear and non-linear econometric techniques. We generated three important results. First, we have rejected a linear cointegration hypothesis in favor of a threshold cointegration model with two different regimes. We found a non-linear adjustment process between the self-employment rate and the own-account workers rate where the relation is different depending on the value of the employer rate (in this paper used as an indicator of the business cycle). Second, results indicate that when the employer rate is above a threshold in one quarter this will produce downward pressure on the own-account worker and self-employment rates in the subsequent quarter. The effect on the own-account workers points at own-account workers succeeding in finding safer (wage) jobs during boom periods. This finding is consistent with literature at the micro level. The effect on the self-employment rate is a logical corollary given the big share of own-account workers in self-employment. Third, during recession periods there is a strong push effect of individuals moving into self-employment. Our results suggest that very few own-account workers succeed in finding safe wage jobs during boom conditions so that the stock of (marginal) own-account workers may become too large during less prosperous phases of the business cycle where many new individuals try to start businesses witnessing a strong recession push effect. We emphasize that our model does not allow us to directly evaluate policy programs stimulating unemployed individuals to start businesses. To be able to do this we would require longitudinal data on individual own-account workers. In particular we do not know which own-account workers (i.e. the formerly unemployed or other own-account workers) succeed in moving to paid-employment and which own-account workers fall back into unemployment. However, our exercise at the macro level suggests that the number of own-account workers finding safer jobs during boom periods is smaller than the supply of new (possibly marginal) own-account workers during recessions suggesting Spain has problems in structurally improving employment rates. In light of such evidence the key question is which direction entrepreneurship policy should take, since the future of an economy depends to a great extent on its success in promoting entrepreneurship. Although we recognize the difficulty of devising a policy conciliating a short-term objective (unemployment) with long run objectives (such as economic growth or innovation) which can address both the issues related to entrepreneurship and active labour market policy. The new schemes of incentives approved by the Spanish Government for encouraging unemployed people to become own-account workers can only aspire, in the best case scenario, to reduce unemployment directly but not to create new employment. In addition, policy makers should be careful about what to do with their stimulus because in the context of a highly regulated labour market these types of incentives could not generate desired effects on paid-employees who switch to dependent self-employment. Leaving aside the sizeable costs on the taxpayer of these interventions, policy makers should think the trade-off between the new short-term opportunities of employment generated by these incentives vs. the possibility of eliminating incentives to create start-ups with a low probability of generating jobs in order to improve the average performance of Spanish entrepreneurs, at least when the economy shows symptoms of recover. Further research is needed to determine whether it is different national and institutional conditions affects to our results. Future work might fruitfully apply the methodology used in this article to a broader range of countries also looking for the employment intensity of self-employment. Finally, in the context of policy analysis, the trade-off between employment protection and the promotion of self-employment should be explored in detail.