Do Disease Epidemics Stimulate or Repress Entrepreneurial Activity?

Abstract

This study addresses a unique angle by examining an under looked determinant of entrepreneurship related to disease epidemics. In times of natural disasters, such as disease epidemics, new demands emerge that might promote entrepreneurship. Using data on a large cross section of countries, we empirically test whether and to what extent the incidence and severity of disease epidemics affect the prevalence of entrepreneurship. The results show that both the occurrence and severity of epidemics spur entrepreneurial activity. These results highlight a potentially important role served by entrepreneurs in responding to biological disasters. Our findings withstand a series of robustness checks.

Do disease epidemics force economic activity underground? International evidence

“…While many determinants of the underground or the shadow sector have been considered in the literature (Goel & Nelson, 2016 ; Schneider & Enste, 2000 ), the insight about spillovers from epidemics seems novel. These findings also contribute to the renewed academic interest in the economics of epidemics (Alfano & Ercolano, 2020 ; Baldwin & di Mauro, 2020 ; Berdiev & Saunoris, 2021 ; Beyer et al, 2021 ; De Wispelaere & Gillis, 2021 ; Farzanegan et al., 2021 ; Folgi & Veldkamp, 2019 ; Goel, Nelson, & Goel, 2021 ; Kumar et al., 2021 ; Rasul, 2020 ; Williams & Kayaoglu, 2020 ).…”

Human Suffering and Natural Experiments: How Empirical Economics can unmask the devastation of Covid-19

“…While the pandemic forced the permanent closure of many businesses, some entrepreneurs created new opportunities. In this issue, Berdiev and Saunoris (2021) find that the pandemic provided a fertile backdrop for new entrepreneurial activity.…”