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Unemployment Insurance and Entrepreneurship
Author(s) -
Røed Knut,
Skogstrøm Jens Fredrik
Publication year - 2014
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/labr.12040
Subject(s) - entrepreneurship , unemployment , subsidy , earnings , labour economics , economics , sanctions , work (physics) , affect (linguistics) , demographic economics , business , market economy , economic growth , political science , finance , sociology , mechanical engineering , engineering , law , communication
Abstract Based on administrative registers from N orway, we examine how unemployment insurance ( UI ) and active labor market programs ( ALMP ) affect the transition rates from unemployment to regular employment and entrepreneurship, as well as subsequent earnings levels. We find that both the employment and entrepreneurship hazards rise sharply in response to UI sanctions and UI exhaustion. On average, transitions to entrepreneurship are more profitable than transitions to regular employment. While employment transitions are highly pro‐cyclical, entrepreneurship transitions are weakly counter‐cyclical. ALMPs targeted at entrepreneurship are rare in N orway, but the few start‐up subsidies that are provided are successful in terms of generating paid work.