Unemployment Risk and Entrepreneurship

  • 研討會日期 : 2021-01-20
  • 時間 : 10:30
  • 主講人 : Mr. Kelvin (Cheuk Yi) Yuen
  • 主持人 : Professor Wan-Jung Cheng
  • 地點 : online
  • 演講者簡介 : Mr. Yuen will receive his Ph.D. in Economics from Washington University in St. Louis in 2021. His research field are Macroeconomics, Labor Economics, and Entrepreneurship. He is applying for a position of the Institute of Economics, Academia Sinica now.
  • 演講摘要 : Understanding the decision of individuals to become a new entrepreneur has long been an important topic among economists. I show empirically that, in response to an increasing unemployment rate, the propensity to become entrepreneurs increases for employed workers but decreases for unemployed workers. To explain these findings, I build an equilibrium search model of entrepreneurship and unemployment with endogenous job destructions. Surging unemployment risk in recessions leads to an increase in the entry rate from employment, which can be decomposed into separation-induced and opportunistic components. I show that the unemployment rate during the Great Recession would have been two percentage points higher if separation-induced entry is absent in the model. Also, unemployment benefits can be beneficial to the economy by inducing more nascent entrepreneurs from employment. A self-employment subsidy can boost the aggregate output as well. Finally, a decline in labor share would discourage entry from employment with a smaller average firm size.