Self-employment and trade shock mitigation

Self-employment and trade shock mitigation This paper investigates the moderating effects of entrepreneurial activity on the impact of trade penetration. Entrepreneurs may help to mitigate adverse trade shocks through several mechanisms, i.e., more flexible output structure, diversified economic portfolio, and higher knowledge spillovers from trade-induced R&D activities. Our empirical work embeds the analysis of entrepreneurship, measured using self-employment rates, into a framework of international trade and local labor markets. The empirical results show that the marginal impacts of Chinese import penetration on job losses are dampened in localities with higher self-employment rates, which suggests self-employment or entrepreneurial activities can mitigate the adverse impacts of trade penetration from low-income countries. Our study provides a novel perspective on entrepreneurs’ benefits on economic well-being: Besides their direct contribution to economic growth documented in earlier research, they can also enhance the resilience of a local economy in the face of external shocks. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Self-employment and trade shock mitigation

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Publisher
Springer Journals
Copyright
Copyright © 2015 by Springer Science+Business Media New York
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-015-9677-6
Publisher site
See Article on Publisher Site

Abstract

This paper investigates the moderating effects of entrepreneurial activity on the impact of trade penetration. Entrepreneurs may help to mitigate adverse trade shocks through several mechanisms, i.e., more flexible output structure, diversified economic portfolio, and higher knowledge spillovers from trade-induced R&D activities. Our empirical work embeds the analysis of entrepreneurship, measured using self-employment rates, into a framework of international trade and local labor markets. The empirical results show that the marginal impacts of Chinese import penetration on job losses are dampened in localities with higher self-employment rates, which suggests self-employment or entrepreneurial activities can mitigate the adverse impacts of trade penetration from low-income countries. Our study provides a novel perspective on entrepreneurs’ benefits on economic well-being: Besides their direct contribution to economic growth documented in earlier research, they can also enhance the resilience of a local economy in the face of external shocks.

Journal

Small Business EconomicsSpringer Journals

Published: Sep 19, 2015

References

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