The Relationship Between Entrepreneurship and Unemployment in Developed and Developing Countries

Abstract

In this paper we investigated the relationship between entrepreneurship rate and unemployment rate in developed and developing countries for a panel of 23 OECD countries and 7 developing countries. We use data over the period 1995-2007. Method in this paper is simultaneous equation model with two-equation. The results indicate that, Schumpeter effect for developed and developing countries is established as a definite (impact of entrepreneurship rate on unemployment rate), but refugee effect (impact of unemployment rate on entrepreneurship rate) is not clearly. The other difference in this article showed the relationship of unemployment rate on entrepreneurship rate (refugee effect) has a square, the first it has increased and then decreased.

 Keywords: Entrepreneurship; Unemployment; Developing Countries; OECD