The birth of new firms—Does unemployment matter? A review of the evidence

The purpose of this paper is to review the most significant recent literature identifying the determinants of new-firm births and the role that unemployment plays. In doing so, the paper draws upon two distinct strands in the economics literature. The first strand of literature is from the field of industrial organization, where the role of entry has been examined within the structure-conduct-performance paradigm. The second strand comes from the literature on entreprepreneurship. Whereas the first approach tends to focus on the industry as the unit of analysis and is concerned primarily with inter-industry comparisons, the second strand of literature is more oriented towards the firm as a unit of analysis and the impact exerted by the macro-economic environment. It is concluded that the most important development for future research is at the interface of these two approaches.