Working Paper Series,
Research Institute of Industrial Economics

Abstract: A large literature has studied the effect of displacement on labor market outcomes in general, but none has evaluated how the displaced manage as self-employed. This paper studies how the survival of the business is affected by displacement in connection to entry, using a discrete-time proportional hazard model on a matched sample of displaced and non-displaced individuals. The main result of the paper is that, as a consequence of previous displacement, the probability of switching from self-employment to paid employment decreases and the probability of switching to unemployment is unaffected.

Keywords: Self-employment; Survival; Displacement

JEL-codes: J24; J63; J65; M13

26 pages, September 24, 2008

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