‘Scarred’ young entrepreneurs. Exploring young adults’ transition from former unemployment to self-employment

The recent increase in youth unemployment has major implications
for the current and future development of European labour markets.
Previous studies reveal the long lasting ‘scarring effects’ of early
unemployment experience on later career prospects, including a
higher probability of future unemployment or social exclusion.
Self-employment is often advocated as a potential remedy for
unemployment in general and youth unemployment in particular.
In this study, we investigate the individual-level factors that lead
young people with the ‘scar’ of previous unemployment to
engage in self-employment. Based on a recent survey among
young adults in eleven European countries, we show that
previous unemployment has a significant moderating effect on
other individual-level characteristics usually associated with a
higher likelihood of being self-employed. While the overall
propensity of self-employment is not affected by unemployment
experience, the reasons for becoming one’s own boss differ
considerably between those young adults who have and those
who have not experienced unemployment in the past.