Using Self-employment as Proxy for Entrepreneurship: Some Empirical Caveats

Research on entrepreneurship has received an increased amount of interest in recent years, with self-employment being used as the most common proxy for “entrepreneurship” in empirical studies. However, there are various ways of defining self-employment, making it a somewhat dubious proxy. This may flaw the analysis, especially in cross-country studies, since the documentation of data often is insufficient and difficult to access due to language barriers. We present an analysis of Swedish self-employment data. We show that the measurement of self-employment has changed over time to noticeably affect the reported number of self-employed in the two major statistical sources on self-employment. The reported development of self-employment sometimes differs diametrically depending on source. Sweden is occasionally erroneously reported to show the largest increase in self-employment in cross-country studies. Our study mimics the results of other country-specific analyses and we conclude that well-grounded conclusions require that the advantages and disadvantages of different statistical sources are recognized.Labor Force Survey; RAMS; Self-employed; Self-employment; Entrepreneurship

Family Business, Employment, and GDP

We analyze the proportion of family business and its contribution to employment and gross domestic product (GDP). Our analysis adds to the literature by including all listed firms and by investigating a longer period than has heretofore been reported. The main contribution is to extend the analysis to include all firms in the economy using census data. Our study is devoted to the case of Sweden. Family business makes up half of the listed firms, and three quarters of all firms, accounting for one-fourth of total employment, and one-fifth of GDP. Their importance has increased during the period studied.Family Firms; Employment; GDP; Sweden; Ownership

Using Self-employment as Proxy for Entrepreneurship: Some Empirical Caveats

Research on entrepreneurship has received an increased amount of interest in recent years, with self-employment being used as the most common proxy for “entrepreneurship” in empirical studies. However, there are various ways of defining selfemployment, making it a somewhat dubious proxy. This may flaw the analysis, especially in cross-country studies, since the documentation of data often is insufficient and difficult to access due to language barriers. We present an analysis of Swedish self-employment data. We show that the measurement of self-employment has changed over time to noticeably affect the reported number of self-employed in the two major statistical sources on self-employment. The reported development of self-employment sometimes differs diametrically depending on source. Sweden is occasionally erroneously reported to show the largest increase in selfemployment in cross-country studies. Our study mimics the results of other country-specific analyses and we conclude that well-grounded conclusions require that the advantages and disadvantages of different statistical sources are recognized.Labor Force Survey; RAMS; self-employed; self employment; entrepreneurship

Ownership and High-Growth Firms

Empirical studies demonstrate that most net job-growth originates from a small number of high-growth firms (HGFs). The purpose of this paper is to analyze whether firm ownership – family, or private non-family – matters for being a HGF, using data covering all firms in Sweden during 1993-2006. Firm growth is measured in terms of absolute employment growth, relative employment growth and as a combination of absolute and relative employment growth (the so-called Birch-index). We find that family ownership decreases the probability of exhibiting high growth. Changing ownership from family to private non family increases the probability of being a HGF, whereas a change from private non-family to family ownership decreases the probability of being a HGF. The results are robust, irrespective of measurement of firm growth, suggesting that ownership and changes in ownership are important determinants of rapid firm growth.high-growth firms; gazelles; firm growth; firm ownership; family firms; rapid firm growth

An international cohort comparison of size effects on job growth

The contribution of different-sized businesses to job creation continues to attract policymakers’ attention; however, it has recently been recognised that conclusions about size were confounded with the effect of age. We probe the role of size, controlling for age, by comparing the cohorts of firms born in 1998 over their first decade of life, using variation across half a dozen northern European countries Austria, Finland, Germany, Norway, Sweden and the UK to pin down size effects. We find that a very small proportion of the smallest firms play a crucial role in accounting for cross-country differences in job growth. A closer analysis reveals that the initial size distribution and survival rates do not seem to explain job growth differences between countries, rather it is a small number of rapidly growing firms that are driving this result

Family Matters : Essays on Family Firms and Employment Protection

This thesis is a study of firm dynamics, family ownership, and employment protection. It addresses the implications of employment protection on firm productivity and how family owned firms react differently with regard to economic shocks. It also investigates whether family ownership matters for the probability of exhibiting high growth. By using a novel data identification strategy, family ownership is identified in full population register data. The thesis also highlights some important caveats in the official statistics on self-employment.Denna avhandling behandlar företagsdynamik, familjeägande och anställningsskydd. I avhandlingen analyseras anställningsskyddet och hur det påverkar företagens produktivitet, samt hur familjeägda företag reagerar på chocker inom industrin. I avhandlingen analyseras också hur familjeägande påverkar sannolikheten för ett företag att uppnå en hög tillväxttakt. Genom att kombinera olika statistikkällor kan samtliga familjeföretag i den den svenska företagspopulationen identifieras. Avhandlingen belyser också några av de problem som finns i den officiella statistiken över egenföretagare.

The Effect of Employment Protection Rules on Firm Productivity - A Natural Experiment

In this paper I study the effect of employment protection rules on firm productivity using micro data on Swedish firms. A reform of the employment protection rules in 2001 made it possible for small firms to exempt two employees from the last-in-first-out rules. The reform targeted only firms with less than 11 employees, representing a natural experiment. I exploit this using a difference-in-differences framework to estimate the reform's effect on labor productivity. By using firm register data I am able to get a precise estimate of labor productivity for all firms in the economy. The results indicate that the reform increased labor productivity by 2.5 percent for the treatment group of small firms compared to the control group of larger firms. This is shown to be economically significant. The results appear to be driven by the smallest firms and firms that were downsizing. When restricting the sample to include only firms that were downsizing and firms that stayed within the group of treatment and control throughout the whole time period, the estimated increase in labor productivity reaches 6 percent. This effect is likely due to a combination of a decrease in moral hazard behavior and an increased possibility for small firms to retain or lay o personnel based on the worker's idiosyncratic productivity.JEL codes: D22, J08, J32, J38, K31, O43</p

Hur viktig är statens styrka för ekonomiskt välstånd?- En studie av alla världens länder

What role does the state play in economic development? This thesis seeks to investigate the relationship between a strong state and economic development. To define the concept of a strong state I focus on the relationship between the scope of state functions and the efficiency of which these functions are implemented. The concept of a strong state is in this thesis defined as the efficiency of the state functions. By using a database constructed by three economists; David Kaufman, Aart Kraay and Massimo Mastruzzi as a measurement of a strong state I test the relationship with economic development empirically. The empirical data covers all of the countries in the world and GDP per capita is used as the dependent variable of economic development. The test is carried out by a linear regression analysis. The analysis shows not only that there is a significant positive relation between state and economic development but furthermore that the relation between the variables is exponential rather than linear. The results show that a strong state has an accelerating return on GDP per capita. This means that an already efficient state can enjoy greater returns in economic development than a not so efficient state

Does job security hamper employment prospects?

We use a reform in the Swedish employment protection legislation (EPL) that decreased dismissal costs for small firms only, to investigate the effect of EPL on the propensity to hire workers who were unemployed or in active labor market programs (ALMPs). The results indicate that less stringent EPL increased the share of workers hired from unemployment. In addition, our results suggest that transitions from some ALMPs to employment increased. Taken together, our results suggest that there was less screening of new hires after the reform, and that liberalization of EPL mitigates the stigma associated with unemployment and participation in ALMPs