Social benefits - Курсовая работа

The few works, exploring the relationship between social security and entrepreneurship activities have proven negative relationship between them. For example, Parker and Robson (2004) focused on business development as on a type of employment rather than a specific activity. They tested twelve OECD countries data for late 20th century, hypnotizing that there is a negative effect of higher social benefits on self-employment. The authors differentiated between different circumstances of starting a business and various perceptions of social benefits effects. First of all, a necessity motive may create a powerful incentive to earn one’s leaving. To fight the scarcity of food and shelter one may choose to join the labour force rather than to start a risky business (become self-employed). If true, this hypothesis proves that higher social benefits reduce the incentive to become self-employed and thus have a negative correlation with entrepreneurship. Secondly, higher unemployment benefits increase unemployment, decreasing the purchasing power of individuals. This is likely to cause a lack of demand for products of almost any business, which implies negative correlation between social benefits and entrepreneurship. This perception is unique because the unemployment is viewed to have effect on the demand side rather than on supply side. Usually workers are perceived as a means of production, not as consumers. Parker and Robson examined the effects of payroll tax, usual tax and social benefits on business formation among countries. The results obtained by this study concluded that there is a strong negative relationship between social benefits and self-employment, while there is a strong positive relationship between tax rate and self-employment. The first outcome is doubtable, as the explanations provided by Parker and Robson above may be challenged. Intuitively the second outcome is not unexpected, as lower taxes leave higher proportion of profits to business owners. The research result supported an idea that government policy has a great influence on entrepreneurship activity: “because tax and benefit variables are under direct government control, governments may have considerable influence on the extent of self-employment within their economies.” This work, however, has a number of drawbacks - it takes a small sample size of only 12 developed countries and accounts for a short 20th century time period, which may be inapplicable to present time. Anyway, Parker and Robson model is the one I will rely on the most in my research, as the conclusions that he makes are unexpected and new. In my work I will try to account for the effect of the corporate tax rate and social benefits. I expect to achieve different results though, as I am using additional factors: crisis, perceived opportunities, cost of borrowing etc. And account for social benefits in kind and in cash separately. Hessels et al (2007) conducted a more detailed analysis on the dependence between self-emloyment and the level of social benefits. Hessels et al (2008) decided to continue their work in this field and developed a new framework, exploring social benefits and self-employment relationship. They state that social security is reflected by the social benefits received from the government and test this variable influence on business development. After testing each of the motives for business formation separately, they state: “We find a significant positive relationship between social security and the incidence of the necessity motive (whereas we hypothesized a negative relationship), no relationship between social security and the increase-wealth motive (while we hypothesized a negative relationship), and a significant negative relationship between social security and the independence motive (whereas we hypothesized a positive relationship).” The authors provide an explanation, similar to Hessels (2007), discussed above, indicating that a high level of social security represents a large number of recipients rather than large individual receivables.