‘Scarred’ young entrepreneurs. Exploring young adults’ transition from former unemployment to self-employment

ABSTRACT

The recent increase in youth unemployment has major implications for the current and future development of European labour markets. Previous studies reveal the long lasting ‘scarring effects’ of early unemployment experience on later career prospects, including a higher probability of future unemployment or social exclusion. Self-employment is often advocated as a potential remedy for unemployment in general and youth unemployment in particular. In this study, we investigate the individual-level factors that lead young people with the ‘scar’ of previous unemployment to engage in self-employment. Based on a recent survey among young adults in eleven European countries, we show that previous unemployment has a significant moderating effect on other individual-level characteristics usually associated with a higher likelihood of being self-employed. While the overall propensity of self-employment is not affected by unemployment experience, the reasons for becoming one’s own boss differ considerably between those young adults who have and those who have not experienced unemployment in the past.

KEYWORDS:

• Youth unemployment
• self-employment
• young adults
• necessity entrepreneurship
• transition
• labour market

JEL CODES:

• L26
• J21
• J64

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Ondřej Dvouletý http://orcid.org/0000-0001-9151-2033

Monika Mühlböck http://orcid.org/0000-0002-0418-1959

Notes

1 Project CUPESSE – Cultural Pathways to Economic Self-Sufficiency and Entrepreneurship (http://cupesse.eu/).

Additional information

Funding

This research is funded under the EU Seventh Framework Programme collaborative research project CUPESSE (Cultural Pathways to Economic Self-Sufficiency and Entrepreneurship; grant agreement number 613257).