DOES SELF-EMPLOYMENT ENHANCE REGIONAL ECONOMIC DEVELOPMENT

Abstract

Creative and qualified self-employed individuals contribute to economic growth by inventing new products, production processes, distribution methods and employing other people. Researchers are interested in self-employment if it can provide jobs to the unemployed population and also for those who face job discrimination. However, increase in self-employment is uncertain because entrepreneurial skills are assumed to be risky and self-employed workers can learn their skills gradually after starting their businesses. Economists pay special attention to finding the conceptual relationship between entrepreneurship as self-employment and economic development. Furthermore, studies show that the process of entrepreneurship has significant spatial autocorrelation and affects neighboring counties. Thus, the objective of this study is to identify and estimate the spatial impacts of self-employment in the economic development of the northeastern United States. The study expects to provide policy makers with vital information for policy measures designed for economic development. The study uses the Spatial Durbin Model (SDM) to estimate the relationship of employment, population and per capita income against self-employment. The results indicate that employment and population are positively linked to self-employment. Also, results highlight the positive contribution of self-employment on rural economic development.