John Schmitt and Nathan Lane of the CEPR:
An International Comparison of Small Business Employment, by John Schmitt and Nathan Lane, CEPR:
Contrary to popular perceptions, the United States has a much smaller small-business sector (as a share of total employment) than other countries of a similar level of economic development. (report) It can be noticed that small business sector varies and is consistent with the concept that high health care costs discourage small business formation. Business start-ups can benefit from the protection of government-funded health care systems.
There is another factor that could influence the small-business situation. An extensive social safety net can reduce the risk of attempts at entrepreneurship. If there is an extensive social safety net to fall back upon if things don’t work out, one might be more willing to quit the job you hate and sink everything you have into a small business.
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