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Entrepreneurship, Labor Market Mobility and the Role of Entrepreneurial Insurance

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  • Gaillard, Alexandre
  • Kankanamge, Sumudu

Abstract

This paper introduces a quantitative model with risky entrepreneurship and search frictions matching the occupational flows between entrepreneurship, paid-employment, and unemployment. We account for the general shape of these flows and key entrepreneurial and labor market features based mostly on micro CPS and SCF data. Using this model, we show that an insurance providing Self-Employment Assistance (SEA) policy mitigates the bias disfavoring self-employment inherent in unemployment insurance programs. Moreover, ability-dependent SEA programs select more productive and wealthier new entrepreneurs out of unemployment. Finally, we show that the interaction between UI design and SEA programs has a significant impact on entrepreneurship.

Suggested Citation

  • Gaillard, Alexandre & Kankanamge, Sumudu, 2018. "Entrepreneurship, Labor Market Mobility and the Role of Entrepreneurial Insurance," TSE Working Papers 18-929, Toulouse School of Economics (TSE), revised Jan 2019.
    • Handle: RePEc:tse:wpaper:32738
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    Cited by:

    1. Sumudu Kankanamge & Alexandre Gaillard, 2019. "Entrepreneurship, Inter-Generational Business Transmission and Aging," 2019 Meeting Papers 1503, Society for Economic Dynamics.
    2. Kilström, Matilda & Roth, Paula, 2024. "Risk-sharing and entrepreneurship," Journal of Comparative Economics, Elsevier, vol. 52(1), pages 341-360.
    3. Kankanamge, Sumudu & Gaillard, Alexandre, 2020. "Buying and Selling Entrepreneurial Assets," TSE Working Papers 20-1078, Toulouse School of Economics (TSE).

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    More about this item

    Keywords

    entrepreneurship; labor market mobility; unemployment; insurance; SEA;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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