Analysis of self-employment in prairie Canada from 1987-2006

Abstract

This paper attempts to provide a basis for future regional entrepreneurship and economic development analysis by studying a particular subset of the labour force in Prairie Canada, self-employed individuals, not employed in agriculture, with employees (SEWE) to test the hypothesis that economies with a higher proportion of entrepreneurs will grow persistently faster than economies with a smaller proportion. The analysis begins by estimating a longitudinal regional participation percentage (or rate) of entrepreneurs for 20 economic regions (ERs) of Prairie Canada from 1987-2006 and examines whether these percentages varied over time. This paper finds the expected regional entrepreneurship percentage to be 5.01%. The SEWE regional participation percentages vary not only from region to region but within regions over time. This paper also analyzes whether there are regions which have consistently had higher entrepreneurship participation percentages and have these regions been rewarded with higher levels of job creation.

Various techniques are used to study the critical questions of this paper. These techniques include simple graphs, regression analysis and the development of a new measurement tool which incorporates relative entrepreneurship participation over time and subsequent job creation (employment) numbers. This alternative analysis is executed to further evaluate whether higher entrepreneurship participation percentages are rewarded with more growth as measured by employment figures, while incorporating the time lag of business creation, growth and/or closure on job creation.

Although this paper supports the widely held intuitive view that economies with a higher proportion of entrepreneurs in the labour force will grow persistently faster than economies with a smaller proportion the evidence is not definitive nor could a direct causal effect be established as higher proportions of entrepreneurs is no guarantee of higher levels of job creation.