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Unemployment and new firm formation: evidence from Polish industries at the regional level

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  • Malgorzata Wosiek

    (University of Rzeszow, Poland)

Abstract

Research background: The present study takes the regional economics perspective to explaining new firm registrations. It focuses on the driving role of unemployment rate in the process of new business formation. Purpose of the article: The main goal of the study is to investigate the effect of regional unemployment (next to other regional characteristics) on subsequent new business formation in Polish regions for the period 2003–2018. The research hypothesis assumes that a rise in unemployment rate has a positive effect on subsequent new business formation. The positive unemployment push effect is expected to be stronger in operational services. Methods: In order to verify the links between unemployment rates and entrepreneurship, panel data methods (fixed effect Driscoll-Kraay and p-VAR estimators) were applied. The analyses were performed at the industry level (manufacturing, construction, wholesale and retail, hotels and restaurants, and financial services) using regional annual data for the period 2003–2018. Findings & value added: This study provides further insight into the unemployment push hypothesis by distinguishing between industry sectors and by considering regional specificities in post-communist economies (e.g. Poland). The findings provide value for policy-makers regarding the selection of policy instruments intended to stimulate regional development through entrepreneurship in lagged areas.

Suggested Citation

  • Malgorzata Wosiek, 2021. "Unemployment and new firm formation: evidence from Polish industries at the regional level," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(4), pages 765-782, December.
    • Handle: RePEc:pes:ierequ:v:16:y:2021:i:4:p:765-782
    DOI: 10.24136/eq.2021.028
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    More about this item

    Keywords

    unemployment rate; necessity entrepreneurship; Polish regions;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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