Uncertainty avoidance and the rate of business ownership across 21 OECD countries, 1976–2004

Persistent differences in the level of business ownership across countries have attracted the attention of scientific as well as political debate. Cultural as well as economic influences are assumed to play a role. This paper deals with the influence of cultural attitudes towards uncertainty on the rate of business ownership across 21 OECD countries. First, the concepts of uncertainty and risk are elaborated, as well as their relevance for entrepreneurship. An occupational choice model is introduced to underpin our reasoning at the macro-level. Second, regression analysis using pooled macro data for 1976, 1990 and 2004 and controlling for several economic variables, yields evidence that uncertainty avoidance is positively correlated with the prevalence of business ownership. According to our model, a restrictive climate of large organizations in high uncertainty avoidance countries pushes individuals striving for autonomy towards self-employment. Regressions for these 3 years separately show that in 2004, this positive correlation is no longer found, indicating that a compensating pull of entrepreneurship in countries with low uncertainty avoidance may have gained momentum in recent years. Third, an interaction term between uncertainty avoidance and GDP per capita in the pooled panel regressions shows that the historical negative relationship between GDP per capita and the level of business ownership is substantially weaker for countries with lower uncertainty avoidance. This suggests that rising opportunity costs of self-employment play a less important role in this cultural environment, or are being compensated by increasing entrepreneurial opportunities.

The relationship between economic development and business ownership revisited

This paper revisits the two-equation model of Carree, van Stel, Thurik and Wennekers (2002) where deviations from the ‘equilibrium’ rate of business ownership play a central role in determining both the growth of business ownership and that of economic development. Two extensions of the original set-up are addressed: using longer time series of averaged data of 23 OECD countries (up to 2004) we can discriminate between different functional forms of the ‘equilibrium’ rate and we allow for different penalties for being above or under the ‘equilibrium’ rate. The additional data do not provide evidence of a superior statistical fit of a U-shaped ‘equilibrium’ relationship when compared to an L-shaped one. There appears to be a growth penalty for having too few business owners but not for having too many.     

Profits from violating controls on the use of a polluting input

Profits from violating the quota, charge and permit market systems are compared. The results indicate that, for a given permit price, the violation profits of the charge and permit market systems are the same and exceed the profits from violating a quota system if the optimal use of inputs in a compliant market is lower than the quota. It is also shown that, under a permit market system, the occurrence of violation decreases the equilibrium price of permits. This implies that the profits from violating a permit market are lower than violation profits of a charge system.     

ENTREPRENEURSHIP OVER THE LIFE CYCLE: WHERE ARE THE YOUNG ENTREPRENEURS?

Most individuals do not start a business and, if they do, they start well into their 30s. To explain these stylized facts, I estimate a dynamic Roy model with experience accumulation, risk aversion, and imperfect information about ability using the Panel Study of Income Dynamics. Information frictions and income risk reduce entrepreneurship by up to 40% and 35%, respectively. Entry costs and information frictions explain most of the delayed entry. Results from counterfactual policies targeting delayed entry suggest that entrepreneurship education can yield higher returns than subsidies. Fostering young entrepreneurship yields higher returns than fostering old entrepreneurship.     

The interplay between the Bayesian and frequentist approaches: a general nesting spatial panel data model

The interplay between the Bayesian and Frequentist approaches: a general nesting spatial panel-data model. Spatial Economic Analysis. An econometric framework mixing the Frequentist and Bayesian approaches is proposed in order to estimate a general nesting spatial model. First, it avoids specific dependency structures between unobserved heterogeneity and regressors, which improves mixing properties of Markov chain Monte Carlo (MCMC) procedures in the presence of unobserved heterogeneity. Second, it allows model selection based on a strong statistical framework, characteristics that are not easily introduced using a Frequentist approach. We perform some simulation exercises, finding good performance of the properties of our approach, and apply the methodology to analyse the relation between productivity and public investment in the United States.     

On the effectiveness of capital controls during the Great Recession: The Brazilian experience (2007–2013)

In this study, we analyze the impact in Brazil of a tax on external capital flows called “Imposto Sobre Operações Finaceiras” (IOF), by following data on a monthly basis from 2007 to 2013. Our goal is to determine whether a change in tax legislation can produce significant effects on the pattern of financial inflows from abroad. Using univariate structural models, our results show that changes in the IOF produced structural breaks on foreign portfolio investments.     

Factors affecting corporate environmental strategy in Spanish industrial firms

During the last 30 years, environmental issues have become very important for governments, consumers and companies. Firms, aware of their environmental responsibilities, have started to show an important commitment to society and the natural environment, developing environmentally friendly strategies. However, the factors that determine the choice of environmental strategies are still unclear. They range from ethical motivations to social, legislative and competitive factors. This study analyses the main antecedents that influence firms' ecological behaviour, distinguishing between environmental orientation and environmental strategies. The hypotheses proposed in this study are analysed by means of a structural equation model on a sample of 235 industrial firms. The results reveal that competitive motivations and management commitment are the most important factors explaining why firms incorporate environmental issues into their strategic planning process. Moreover, management commitment is a critical factor for firms because managers' perception about customers' ecological concern directly influences firms' environmental behaviour. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.     

Mind the Gap: A Study of Cause-Specific Mortality by Socioeconomic Circumstances

Socioeconomic groups may be exposed to varying levels of mortality; this is certainly the case in the United Kingdom, where the gaps in life expectancy, differentiated by socioeconomic circumstances, are widening. The reasons for such diverging trends are yet unclear, but a study of cause-specific mortality may provide rich insight into this phenomenon. Therefore, we investigate the relationship between socioeconomic circumstances and cause-specific mortality using a unique dataset obtained from the U.K. Office for National Statistics. We apply a multinomial logistic framework; the reason is twofold. First, covariates such as socioeconomic circumstances are readily incorporated, and, second, the framework is able to handle the intrinsic dependence amongst the competing causes. As a consequence of the dataset and modeling framework, we are able to investigate the impact of improvements in cause-specific mortality by socioeconomic circumstances. We assess the impact using (residual) life expectancy, a measure of aggregate mortality. Of main interest are the gaps in life expectancy among socioeconomic groups, the trends in these gaps over time, and the ability to identify the causes most influential in reducing these gaps. This analysis is performed through the investigation of different scenarios: first, by eliminating one cause of death at a time; second, by meeting a target set by the World Health Organization (WHO), called WHO 25 × 25; and third, by developing an optimal strategy to increase life expectancy and reduce inequalities.