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Title: The Dynamic Relationship between Entrepreneurship, Unemployment, and Growth: Evidence from U.S. Industries

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: Our study looks at the dynamic relationship between entrepreneurship, unemployment, and growth across 10 sectors of the U.S. using quarterly data for the period 2000-2009. The models measure entrepreneurship using the net entry rate of establishments from the Business Employment Dynamics (BED) dataset compiled by the Bureau of Labor Statistics (BLS) and growth using real value added (GDP) from the Bureau of Economic Analysis (BEA). Past entrepreneurship has a positive effect on growth in 4 out of 10 sectors, and a negative effect on unemployment in 4 out of 10 sectors. Past growth has a positive effect on entrepreneurship in 4 out of 10 sectors, and a negative effect on unemployment in 6 out of 10 sectors. Past unemployment has a positive effect on entrepreneurship in 3 out of 10 sectors, and a positive effect on growth in 4 out of 10 sectors. In other words, entrepreneurship and growth have a dynamic relationship in which one generates the other; unemployment spurs entrepreneurship, but entrepreneurship dampens unemployment; and growth dampens unemployment, but unemployment spurs growth.

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Authors: Plehn-Dujowich, Jose M.

Publisher: The United States Small Business Administration

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

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