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Unemployment Benefits and Entrepreneurship

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  • Hamid Beladi
  • Saibal Kar

Abstract

type="main"> Several recent empirical papers show that unemployment benefits crowd out nascent entrepreneurs. In the present paper provide theoretical support in favour of this interesting result. Over fairly general preference patterns we obtain a measure of the opportunity cost of entrepreneurs in the presence of unemployment benefits and derive conditions under which potential entrepreneurs suffer as unemployment benefits rise. We formulate a clear transmission mechanism in the labour market that links unemployment benefits to occupational choice for a group of risk-averse individuals.

Suggested Citation

  • Hamid Beladi & Saibal Kar, 2014. "Unemployment Benefits and Entrepreneurship," The Japanese Economic Review, Japanese Economic Association, vol. 65(1), pages 122-128, March.
    • Handle: RePEc:bla:jecrev:v:65:y:2014:i:1:p:122-128
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    File URL: http://hdl.handle.net/10.1111/jere.12023
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    References listed on IDEAS

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    Cited by:

    1. Irina Bilan & Constantin-Marius Apostoaie, 2023. "Unemployment benefits, entrepreneurship policies, and new business creation," Small Business Economics, Springer, vol. 61(4), pages 1411-1436, December.

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