Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 315: Habitual Entrepreneurs in the Making: How Labour Market Rigidity and Employment Affects Entrepreneurial Re-entry

Karl Wennberg (), Anne-Sophie Larsson () and Kun Fu ()
Additional contact information
Karl Wennberg: Linköping University
Anne-Sophie Larsson: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Kun Fu: Loughborough University London

Abstract: We investigate the impact of country-level labour market regulations on the reentry decision of experienced entrepreneurs, whereby they become habitual entrepreneurs. Multilevel logit models on entry decisions among 15,709 individuals in 29 European countries show that labour market regulations have a positive influence on the decision to reenter into entrepreneurship. This positive impact is stronger among individuals holding wage jobs at the time of re-entry compared to those that do not. Our results indicate that novice and habitual entrepreneurs may respond very differently to labour market rigidity. We discuss and provide tentative explanations for these differences, and outline potential policy implications.

Keywords: Habitual entrepreneurship; employment; labour market rigidity; institutional context; multilevel modelling

JEL-codes: J24; J41; K31; L26

41 pages, December 10, 2018

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