Self-employment Entry and Survival: Evidence from Sweden

Essay 1: Hurst and Lusardi (2004) use higher-order polynomials in wealth in estimating the relationship with entrepreneurship. They find evidence conflicting with the existence of extensive liquidity constraints in the United States. In this paper, their approach is replicated on Swedish data. A positive relationship between wealth and entrepreneurship is found, which supports the liquidity constraints hypothesis. Alternative methods attempting to handle the endogeneity problem and distinguish between absolute decreasing risk aversion and liquidity constraints give further support to the hypothesis. The paper suggests that there exist liquidity constraints in Sweden, which are possibly more extensive than in the United States.
Essay 2: Displacement is expected to decrease the reservation wage of self-employment by decreasing earnings in paid employment and increasing the probability of unemployment. This paper examines whether displacement increases the probability of self-employment using propensity score matching on Swedish register-based data. The data include all individuals displaced due to plant closures in 1987 and 1988, and a random sample of 200,000 employed individuals. The results suggest that displacement almost doubles the probability of entering self-employment the year after displacement. A sub-sample analysis indicates that individuals with a potentially worse position on the labor market react more strongly to displacement in terms of entering self-employment.
Essay 3: A large literature has studied the effect of displacement on labor market outcomes in general, but no one has evaluated how the displaced succeed 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.


Essay 1
Entrepreneurship and Liquidity Constraints: Evidence from Sweden
1 Intoduction
2 Data
2.1 Dependent variable
2.2 Explanatory variables
3 Household wealth and entrepreneurship
3.1 Baseline results
3.2 Robustness analysis
4 Endogeneity of household wealth
4.1 Low and high initial capital requirements
4.2 Housing capital gains
5 Decreasing absolute risk aversion
6 Tax evasion and tax avoidance
7 Summary and discussio
A Correlation table for the explanatory variables
Essay 2
Displacement and Self-employment Entry
1 Introduction
2 Theoretical framework and related literature
3 Data
3.1 Identification and definition of displaced workers
3.2 Identification and definition of self-employed
3.3 Pre-displacement information
4 Empirical method
4.1 Propensity score matching
4.2 Estimation of the propensity score
5 Results
5.1 Baseline results
5.2 Sub-sample results
6 Conclusion
A Definition of the length of the closure process
B Estimation of the propensity score
C The common support
Essay 3
The Effects of Displacement on Self-employment Survival
1 Introduction
2 Related literature and a theoretical framework
3 Empirical strategy
4 Data and descriptive analysis
4.1 Self-employment and exit states
4.2 Identifying the displaced
4.3 Control variables and creating a matched sample
4.4 Life table estimates
5 Empirical results
5.1 Baseline results
5.2 Robustness analysis
6 Concluding remarks
A Definition of the length of the closure process

Author: Nykvist, Jenny

Source: Uppsala University Library

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