Decreasing unemployment rate is one of the most striking objects for economic planners and decision makers; and achieves to this, will lead to solve a lot of economic and social problems. Among the many factors that affect unemployment rates, entrepreneurship has been an interesting topic for researchers for quite some time. The relationship between entrepreneurship and unemployment has posed a complex puzzle to scholars. One view, which has been called the unemployment push, or refugee effect, suggests that the decision to become an entrepreneur is a response to either being unemployed or else the perception of dismal future employment prospects. An alternative view suggests that entrepreneurship, by virtue of creating a new venture, contributes to the reduction of unemployment. While the first view suggests a positive relationship between entrepreneurship and unemployment, the second view suggests a negative relation between them. The present paper examines the relationship between entrepreneurship, and unemployment in Sistan & Baluchestan Province with using Toda-Yamamoto approach in the period from 1998 to 2010. The results indicate that, Schumpeter effect for Province studied is established as a definite (impact of entrepreneurship rate on unemployment rate), but refugee effect (impact of unemployment rate on entrepreneurship rate) Cannot be confirmed. The evidence generally supports the existence of a uni-directional causality that runs from entrepreneurship to unemployment rate for the case of Sistan & Baluchestan.
Unemployment Rate, Entrepreneurship, Toda-Yamamoto approach
