Business Cycles, Unemployment and Entrepreneurial Entry: First Evidence from Germany

28 Pages Posted: 27 Mar 2013

See all articles by Michael Fritsch

Michael Fritsch

University of Jena - School of Economics and Business Administration

Alexander Kritikos

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften; German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Katharina Pijnenburg

German Institute for Economic Research (DIW Berlin)

Date Written: March 1, 2013

Abstract

We investigate whether people become more willingly self-employed during boom periods or in recessions and to what extent it is the business cycle or the employment status influencing entry rates into entrepreneurship. Our analysis for Germany reveals that start-up activities are positively influenced by unemployment rates and that the cyclical component of real GDP has a negative effect. This implies that new business formation is counter-cyclical. Further disentangling periods of low and high unemployment periods reveals a "low unemployment retard effect."

Keywords: Self-employment, business cycle, unemployment, start-up

JEL Classification: L26, E32

Suggested Citation

Fritsch, Michael and Kritikos, Alexander S. and Pijnenburg, Katharina, Business Cycles, Unemployment and Entrepreneurial Entry: First Evidence from Germany (March 1, 2013). DIW Berlin Discussion Paper No. 1281, Available at SSRN: https://ssrn.com/abstract=2239726 or http://dx.doi.org/10.2139/ssrn.2239726

Michael Fritsch

University of Jena - School of Economics and Business Administration ( email )

Carl-Zeiss-Str. 3
D-07743 Jena
Germany

Alexander S. Kritikos (Contact Author)

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften ( email )

15230 Frankfurt (Oder)
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Katharina Pijnenburg

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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