Entrepreneurship, Labor Market Mobility and the Role of Entrepreneurial Insurance

Gaillard, Alexandre and Kankanamge, Sumudu (2018) Entrepreneurship, Labor Market Mobility and the Role of Entrepreneurial Insurance. TSE Working Paper, n. 18-929, Toulouse

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Official URL: http://tse-fr.eu/pub/32738

Abstract

This paper introduces a quantitative general equilibrium model with risky entrepreneurship and search frictions designed to endogenously match the magnitude of the occupational flows between entrepreneurship, paid-employment and unemployment. The model also accounts for the general shape of these flows as well as key entrepreneurial and labor market features in the US, based mostly on micro CPS and SCF data. We use this model to examine the mitigation of the bias created by most current unemployment insurance programs in favor of paid-employment and at the expense of self-employment. We show that an entrepreneurial insurance program can significantly reduce this bias and we decompose the elements that most contribute to this reduction. Comparing this policy to an entrepreneurial subsidy, we find that entrepreneurial insurance selects more talented, wealthier, faster growing and longer lasting entrepreneurs from the unemployment pool. Finally, we find that UI system attributes have a significant impact on entrepreneurship, which might be an important additional concern for optimal UI design.

Item Type: Monograph (Working Paper)
Language: English
Date: June 2018
Place of Publication: Toulouse
Uncontrolled Keywords: entrepreneurship, labor market mobility, unemployment, insurance
JEL codes: E24 - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
J68 - Public Policy
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: University Toulouse1 Capitole
Site: UT1
Date Deposited: 22 Jun 2018 15:24
Last Modified: 22 Jun 2018 15:24
OAI ID: oai:tse-fr.eu:32738
URI: http://publications.ut-capitole.fr/id/eprint/26098

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