Is Business Failure Due to Lack of Effort? Empirical Evidence from a Large Administrative Sample

Bibliographic Data

ID9709027
AuthorsMette Ejrnæs (0000-0002-9586-8149, University of Copenhagen and The Danish National Centre for Social Research), Stefan Hochguertel (VU University Amsterdam and Tinbergen Institute)
Year2013
Volume123
Issue571
Pages791-830
Publication date2013-09-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/ecoj.12026
OpenAlexW2050796051
LanguageEN
Citations received3
References cited35

Does insurance provision reduce entrepreneurs' effort to avoid business failure? We exploit unique features of the voluntary Danish unemployment insurance (UI) scheme, that is available to the self-employed. Using a large sample of self-employed individuals, we estimate the causal effect of insurance choice on the probability to become unemployed. Identification of the insurance choice comes from eligibility conditions for an early retirement plan, accessible only to UI members. We find that those who are insured are 2 percentage points more likely to become unemployed subsequently compared with the uninsured, however only 0.6 percentage points are caused by moral hazard. The Economic Journal © 2013 The Author(s). The Economic Journal © 2013 Royal Economic Society

Danish · Economics · Empirical evidence · Library science · Management · Political science · Sample (material · Computer Science · Financial Literacy, Pension, Retirement Analysis · Fiscal Policy and Economic Growth · History · Housing Market and Economics · Philosophy

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