Unemployment and Business Formation Rates: Reconciling Time-Series and Cross-Section Evidence
- 1 February 1989
- journal article
- Published by SAGE Publications in Environment and Planning A: Economy and Space
- Vol. 21 (2) , 249-255
- https://doi.org/10.1068/a210249
Abstract
Time-series analyses generally show rates of business formation increasing with unemployment. In cross-section studies the areas with the highest rates of formation are generally those with the lowest levels of unemployment. In a study using both types of data, the negative cross-section relationship is confirmed but it is suggested that the time-series may be nonlinear, becoming negative at a critical unemployment level around 20%. The paper concludes with a reconciliation of these findings.Keywords
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