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Regional Self‐Employment: The Effect of State Push and Pull Factors
Author(s) -
Benedict Mary Ellen,
Hakobyan Irinah
Publication year - 2008
Publication title -
politics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.259
H-Index - 23
eISSN - 1747-1346
pISSN - 1555-5623
DOI - 10.1111/j.1747-1346.2008.00105.x
Subject(s) - self employment , recession , prosperity , business cycle , economics , labour economics , entrepreneurship , demographic economics , economic growth , macroeconomics , finance
This study investigates the effects of business cycle, tax, and self‐employment policy on the self‐employment rate at the state level. Using 1999‐2002 data, the results of the analysis suggest that the recession‐push hypothesis of self‐employment is not supported for the United States. In fact, it appears as though the prosperity‐pull hypothesis is a more likely candidate for explaining self‐employment and business cycle changes. Further, the Self‐Employment Assistance Program, based on the recession‐push hypothesis, appears to have a negative effect on the self‐employment rate. These results suggest that current programs to promote self‐employment have incorrectly focused on the unemployed, and/or have not prepared participants for self‐employment. The study also examines the tax effect on self‐employment and finds only weak support for the tax avoidance hypothesis.