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IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: The business cycle is likely to be of importance for self-employment rates. When the economy is growing, business opportunities open up and encourage the set-up of new firms. In downturns, self-employment may be a way to avoid unemployment. The strength of these pull and push factors may depend on the amount of human capital a person has. The findings in this paper show that although the local business cycle is of minor importance for total self-employment rates in Sweden, there are heterogeneous effects across groups. People with higher human capital endowments are more likely to be pulled into self-employment, while those with lower human capital endowments are to a larger extent pushed into self-employment. This pattern is particularly strong for women.

Keywords: Self-employment; local business cycle; panel data

JEL-codes: J21; J24

29 pages, August 8, 2013

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Published as

Helena Svaleryd, (2015), 'Self-employment and the local business cycle', Small Business Economics, vol 44, no 1, pages 55-70

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