Introduction
Unemployment can act as a substance for entrepreneurship, as individuals facing joblessness may choose to create their own opportunities and businesses, therefore possibly addressing the unemployment issue. This “push” factor, or necessity-based entrepreneurship, can also lead to new businesses and job creation. In this article, we talked about how an unemployed person can turn to an entrepreneur, and also examples of how Individuals have transitioned from unemployment to entrepreneurship.
Unemployment occurs when someone is willing and able to work but does not have a paid job. The unemployment rate is the percentage of people in the labor force who are unemployed. Consequently, measuring the unemployment rate requires identifying who is in the labor force.
Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise, along with any of its uncertainties in order to make a profit. The most prominent example of entrepreneurship is the starting of new businesses.
The Relationship between Unemployment and Entrepreneurship can be viewed as follows:
- The “Push” Factor: Necessity-Based Entrepreneurship
Unemployment as a Catalyst:
When unemployment rates are high, some individuals may choose to become self-employed or start their own businesses as a way to generate income and avoid joblessness. This is often referred to as “necessity-based entrepreneurship”.
Market Opportunity:
High unemployment can also lead to a “market room” as some businesses may close down, creating opportunities for new ventures to emerge.
Schumpeter Effect:
Some argue that new firms, created by entrepreneurs, can reduce unemployment by creating new jobs and driving innovation.
- The “Pull” Factor: Entrepreneurship as a Driver of Employment
Job Creation:
Entrepreneurial activities, such as starting new businesses and expanding existing ones, can lead to the creation of new jobs and a reduction in unemployment.
Economic Growth:
Entrepreneurship can contribute to economic growth by fostering innovation, competition, and the development of new products and services.
Refugee Effect:
Some theories suggest that increased entrepreneurial activity can lead to a decrease in unemployment because new businesses hire employees, ultimately reducing the number of unemployed individuals.
- The Complexity of the Relationship
Dual Relationship:
The relationship between unemployment and entrepreneurship is not always straightforward, and it can be both positive and negative.
Context Matters:
The specific context, including economic conditions, government policies, and cultural factors, can influence the relationship between unemployment and entrepreneurship.
Multiple Factors:
Unemployment is a complex issue with multiple factors contributing to it, and entrepreneurship is just one potential solution.
Some Examples of how Individuals have Transitioned from Unemployment to Entrepreneurship:
Starting a Small Business:
E-commerce store: Individuals can influence online platforms to create and sell products, offering a wide range of goods to customers.
Retail shop: Setting up a physical store to sell goods or services, catering to local needs and preferences.
Restaurant or food business: Capitalizing on culinary skills and local demand to establish a restaurant or food business.
Leveraging Skills and Talents:
Mobile app development: Individuals with coding skills can develop and launch their own mobile applications, addressing specific needs or offering unique solutions.
Social media management: Using social media expertise to manage accounts for businesses or individuals, offering content creation and engagement strategies.
Graphic design: Creating visual content for print and digital media, offering design services to businesses or individuals.
Website development: Building websites for businesses and individuals, providing online presence and functionality.
Creative Ventures:
Blogging: Sharing knowledge and expertise through blogging, potentially monetizing the blog through advertising, affiliate marketing, or sponsored content.
Content creation: Creating engaging content for various platforms, such as social media, websites, or videos.
Freelance writing: Offering writing services to businesses and individuals, contributing to various publications and websites.
Photography or videography: Capturing events and creating visual content for various purposes, including product shoots and marketing materials.
Service-Oriented Businesses:
Personal training: Offering fitness training and coaching services, helping individuals achieve their fitness goals.
Event planning: Organizing and managing events for individuals and businesses, providing a unique and memorable experience.
Fitness or yoga studio: Creating a space for fitness activities, offering classes and programs for various fitness levels.
Conclusion
While Entrepreneurship can offer a path out of unemployment, it’s not a guaranteed solution, and its effectiveness depends on factors like available resources, skills, and market conditions, as well as the nature of the entrepreneurial venture. Proceeding, unemployment rates may inspire start-up activity of self-employed. On the other hand, higher rate of self-employment may indicate increased entrepreneurial activity, reducing unemployment in following period.