The Relationship Between Self-Employment and Economic Development

The shape of the relationship between self-employment and economic development is a hotly debated issue. This paper contributes to the line of research by examining the relationship between self-employment and economic development for a panel of 29 countries over 39 years using panel data analysis techniques. No clear evidence of a U-shaped relationship was found. A robust, negative linear relationship seems to describe the relationship the best. Interestingly, the study also found that the business ownership rate is converging toward a common value with a convergence speed of about 5.5% per year.

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