Relationship between unemployment and new business registrations at the local level: the case of Poland

This article investigates the impact of local unemployment rate on new business registrations in different branches of service sector in Poland between 2003 and 2018. This relationship was verified using panel data methods (fixed effect Driscoll-Kraay estimators and panel VAR estimators). Additionally, the research approach involves considering local determinants which impact the relationship between unemployment and the entrepreneurship dynamic. The research results indicate a positive relationship between rising unemployment and the increase in the number of new operational and knowledge-based business-oriented service businesses in Poland between 2003 and 2018. Service sector, thus, is exposed to a relatively large presence of necessity entrepreneurship. Moreover, the study reveals the intra-regional territorial variation in terms of unemployment push effect with lower elasticity of the gross entry rate against unemployment in cities with poviat rights (where there are more incentives for entrepreneurial activity).