Re-Evaluating the Relationship Between Economic Development and Self-Employment, at the Macro-Level: A Bayesian Model Averaging Approach

Author
Keywords
Abstract
We re-evaluate the relationship between stages of economic development and entrepreneurship, at the macro level. We first conduct a literature review of previous empirical research on cross-country determinants of entrepreneurship in order to put our contribution in perspective. To circumvent problems related to model uncertainty we use Bayesian Model Averaging (BMA) to evaluate the robustness of determinants of economic growth in a new dataset of 117 countries in the 2005-2019 period, allowing fixed effects and investigating the existence of heterogeneity allowing interactions of our focus variable with other regressors. Our empirical analysis then shows that the variation of self-employment rates across countries are mainly determined by variations in the unemployment, the stage of economic development and the variations in labor market frictions. When interactions are taken into account, results confirm that there is a differential effect of labor market frictions in countries with different levels of income. Frictions in labor market may encourage becoming self-employed in richer countries.
Year of Publication
2022
Journal
International Journal of Interactive Multimedia and Artificial Intelligence
Volume
7
Issue
Special Issue on Artificial Intelligence in Economics, Finance and Business
Number
3
Number of Pages
20-25
Date Published
03/2022
ISSN Number
1989-1660
URL
https://www.ijimai.org/journal/sites/default/files/2022-02/ijimai7_3_2.pdf
DOI
10.9781/ijimai.2022.01.007
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