Regional unemployment, self-employment and family background

Abstract

This paper analyses the role of regional unemployment on self-employment. The paper argues that family background separates individuals with respect to the effect of unemployment. The empirical analysis is based on data on a sample of Finnish residents aged 0–14 years in 1970 whose subsequent employment is examined. The results show that high unemployment in a region pushes individuals from self-employed families into self-employment, while it has the opposite effect on individuals from wage earner families. The push effect seems to work only among those individuals who already have entrepreneurial skills through their family background.