Self-employment and business cycles: searching for asymmetries in a panel of 23 OECD countries

Abstract

The aim of this work is to identify whether the bidirectional relationship between entrepreneurship cycles and output gaps is asymmetric depending on the phase of the business cycle. To this end, we employ a panel threshold regression model in which different relations can prevail in each regime, defined by the values of the threshold variable. The findings of this article qualify previous empirical results. In particular, our estimates provide support for the existence of different responses – both in terms of sign and magnitude – of cyclical self-employment to output growth and of output growth to cyclical self-employment, depending on the value of the threshold variable. The result is highly important for policy makers and practitioners given that whether they ignore the asymmetric impact that an entrepreneurship promotion policy action might have on the real economy, the action might lead to unexpected effects.

Keywords:

• entrepreneurship
• self-employment
• business cycles
• panel threshold models
• OECD
• asymmetries

JEL Classification:

• L26
• J23
• E32
• C23

Additional information

Notes on contributors

Mónica Carmona

Mónica CARMONA. She is Senior Lecturer of Marketing and Head of the Department of Business Administration and Marketing. Her areas of interest are entrepreneurship, and applied economics.

Emilio Congregado

Emilio CONGREGADO. He is Associate Professor in the Department of Economics. His field of research is the Economics of Entrepreneurship.

Antonio A. Golpe

Antonio A. GOLPE. He is Associate Professor. His main research interests are in the area of applied economics.

Jesus Iglesias

Jesus IGLESIAS. He is Lecturer in Economics. His field of research is the Economics of Entrepre-neurship.