Determinants of Self-Employment Survival in Europe

Small Business Economics, Forthcoming

Posted: 8 Jan 2010 Last revised: 13 Oct 2010

Date Written: January 7, 2010

Abstract

This paper investigates the determinants of self-employment survival in Europe in two stages. The first one focuses on the effect of variables at the individual level, while the second raises questions regarding specific regional factors through the introduction of macro variables. In conducting this analysis, discrete choice models, including both single and competing risks frameworks, are applied to data drawn from the European Community Household Panel from 1994 to 2001. Different destination states are considered: paid-employment, unemployment and inactivity. This allows us to search for the underlying determinants of these different hazards. The results suggest a positive impact on survival of formal education and previous experience within the labour market. In addition, we find that entering self-employment from unemployment has a strong negative effect on survival within self-employment. However, our results also show that the expenditure on start-up subsidies decreases the risk of exiting self-employment specifically for the group of individuals entering self-employment from unemployment. Therefore, the availability of these incentives might be seen by policymakers as not only a route to increase entry into self-employment, but also as an adequate instrument for equalising survival chances across individuals entering self-employment from unemployment and those entering with a different starting status.

Keywords: Entrepreneurship, self-employment, survival, occupational choice, labour market policies, regulatory environment

JEL Classification: C41, J08, J24, J60, M13

Suggested Citation

Millan, Jose Maria and Congregado, Emilio and Román, Concepción, Determinants of Self-Employment Survival in Europe (January 7, 2010). Small Business Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1532783

Jose Maria Millan (Contact Author)

University of Huelva ( email )

Plaza de la Merced 11
Huelva, Huelva 21071
Spain
+34959217886 (Phone)

Emilio Congregado

University of Huelva ( email )

Departament of Economics
Plaza de la Merced, 11
Huelva, Huelva 21002
Spain

HOME PAGE: http://www.uhu.es/emilio.congregado

Concepción Román

University of Huelva ( email )

Plaza de la Merced 11
Huelva, Huelva 21071
Spain
+34959217886 (Phone)

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