The relationship between entrepreneurship and unemployment: Is Portugal an outlier? |
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Authors: | Rui Baptista [Author Vitae] A. Roy Thurik [Author Vitae] |
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Affiliation: | a Instituto Superior Técnico, Technical University of Lisbon, Portugal b Max Planck Institute for Research into Economic Systems, Jena, Germany c Rotterdam School of Economics, Erasmus University Rotterdam, EIM, Zoetermeer, The Netherlands |
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Abstract: | The present paper examines the relationship between entrepreneurship, as measured by the variation in business ownership rates, and unemployment in Portugal in the period from 1972 to 2002. It concludes that Portugal has been a relative outlier in regard to the effects of entrepreneurship on unemployment when compared with the OECD average. Although the nature of entrepreneurship may be different in the Portuguese case, due to a high proportion of “micro-businesses” created for subsistence which have little impact on growth and employment, this factor does not seem to be the primary reason for the observed discrepancies. The differences between observed levels of unemployment for Portugal and those predicted by a model based on OECD data seem to be mostly associated with macroeconomic fluctuations associated with European business cycles and EU “cohesion” funding, as well as with adjustment costs to new technology adoption which lead to productivity slowdowns, thus increasing the time lag for the effect of entrepreneurship on employment beyond the OECD average. |
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Keywords: | Entrepreneurship Unemployment Regional development Portugal OECD |
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