-
Business ownership is higher among immigrants,
but promoting self-employment is unlikely to improve outcomes for the less
skilled
Immigrants are widely perceived to be highly
entrepreneurial, contributing to economic growth and innovation, and
self-employment is often viewed as a means of enhancing labor market
integration and success among immigrants. Accordingly, many countries have
established special visas and entry requirements to attract immigrant
entrepreneurs. Research supports some of these stances, but expectations may
be too high. There is no strong evidence that self-employment is an
effective tool of upward economic mobility among low-skilled immigrants.
More broadly prioritizing high-skilled immigrants may prove to be more
successful than focusing on entrepreneurship.
MoreLess
-
The right policies can help the self-employed to boost
their earnings above the poverty level and earn more for the work they do
A key way for the world’s poor to escape poverty is to earn
more for their labor. Most of the world’s poor people are self-employed, but because
there are few opportunities in most developing countries for them to earn enough to
escape poverty, they are working hard but working poor. Two key policy planks in the
fight against poverty should be: raising the returns to self-employment and creating
more opportunities to move from self-employment into higher paying wage employment.
MoreLess
-
Digital payments can increase firms’ profits by
allowing more efficient and cost-effective financial transactions
Digital payment systems can conveniently and
affordably connect entrepreneurs with banks, employees, suppliers, and new
markets for their goods and services. These systems can accelerate business
registration and payments for business licenses and permits by reducing
travel time and expenses. Digital financial services can also improve access
to savings accounts and loans. Electronic wage payments to workers can
increase security and reduce the time and cost of paying employees. Yet,
there are challenges as many entrepreneurs and employees lack bank accounts,
digital devices, and reliable technology infrastructure.
MoreLess
-
Harnessing the benefits of diversity is essential for
encouraging entrepreneurship in the transition region
Entrepreneurship is an important lever for spurring transition
in the economies of the former Soviet Union and Central and Eastern Europe. Utilizing
diversity, in terms of religion or gender, can positively affect entrepreneurial development.
Programs that encourage entrepreneurial initiatives (such as business start-ups) in culturally
diverse localities should rank high on the policy agenda. Prompting women to start a business,
along with female-friendly measures (including targeted legislation), can positively affect
entrepreneurial behaviour and the performance of existing enterprises.
MoreLess
-
Moonlighting responds to economic needs, but can
generate new skills and careers
Multiple job-holding, or “moonlighting,” is an
important form of atypical employment in most economies. New forms of work,
driven by digitalization, may enable its future growth. However, many
misconceptions exist, including the belief that multiple job-holders are
low-skilled workers who moonlight primarily for financial reasons, or that
the practice increases during economic downturns. Recent literature
highlights the significant links between moonlighting and job mobility.
Multiple job-holding allows for the development of workers’ skills and spurs
entrepreneurship.
MoreLess
-
In post-Soviet countries, well-functioning
institutions are needed to foster productive entrepreneurial development and
growth
Supportive institutional environments help build
the foundations for innovative and productive entrepreneurship. A few
post-Soviet countries have benefitted from international integration through
EU membership, which enabled the development of democracy and free market
principles. However, many post-Soviet economies continue to face high levels
of corruption, complex business regulations, weak rule of law and uncertain
property rights. For them, international integration can provide the needed
support to push through unpopular yet necessary stages of the reform
process.
MoreLess
-
Effective measurement can help policymakers
harness a wide variety of gains from entrepreneurship
Policymakers rely on entrepreneurs to create
jobs, provide incomes, innovate, pay taxes to support public revenues,
create competition in industries, and much more. Due to its highly
heterogeneous nature, the choice of entrepreneurship measures is critically
important, impacting the diagnosis, analysis, projection, and understanding
of potential and existing policy. Some key aspects to measure include the
how (self-employment, new firm formation),
why (necessity, opportunity), and what (growth). As such, gaining better insight into
the challenges of measuring entrepreneurship is a necessary and productive
investment for policymakers.
MoreLess
-
The type, quality, and quantity of
entrepreneurship are influenced significantly by corporate income
taxes—though only slightly
Corporate income taxation influences the
quantity and type of entrepreneurship, which in turn affects economic
development. Empirical evidence shows that higher corporate income tax rates
reduce business density and entrepreneurship entry rates and increase the
capital size of new firms. The progressivity of tax rates increases
entrepreneurship entry rates, whereas highly complex tax codes reduce them.
Policymakers should understand the effects and underlying mechanisms that
determine how corporate income taxation influences entrepreneurship in order
to provide a favorable business environment.
MoreLess
-
Family and kinship ties offer multiple benefits
to developing country entrepreneurs but can also have adverse effects
Family and kinship networks are important in
helping people get jobs and start companies, as statistics for developing
countries show. Promising new research has begun to assess the positive and
negative effects of these family and kinship ties on entrepreneurial
success. To what extent, and why, are family networks used, and do they
result in better economic outcomes for entrepreneurs? Results point to the
need for policymakers to identify and emulate efficient informal networks in
order to develop innovative support policies for vulnerable entrepreneurs,
especially for those who are attached to weak or inefficient networks.
MoreLess
-
Government should create an enabling
environment—for entrepreneurs and investors—rather than try to pick
“winners”
Entrepreneurship is essential to job creation
and to productivity growth and therefore is an important matter for
government policy. However, policymakers face a difficult challenge because
successful growth for a few firms—which cannot easily be identified in
advance—is accompanied by widespread failure for most other new firms.
Predicting which firms will fail and which will succeed is nearly
impossible. Instead of futilely trying to pick winners, governments can play
a useful role in facilitating the growth of the most promising firms by
setting the conditions for efficient trial-and-error experimentation across
firms.
MoreLess