Entrepreneurship and unemployment in the UK

Abstract

The influence of industrial structure, more specifically of entrepreneurship, is investigated on the level of unemployment in the UK. The question is to what extent entrepreneurship, i.e., business ownership can reduce the level of unemployment. The alleged differences between the managed and the entrepreneurial economy will be discussed as well as the links between entrepreneurship and unemployment. It will be concluded that the UK is a relative outlier when using a simple model of the relationship between unemployment and the rate of business ownership. The model is calibrated using recent data of some 23 OECD countries. It underestimates the decrease in unemployment in the UK in the period 1982-1990. Some arguments are brought forward why this might be the case.