Necessity and Opportunity Entrepreneurship in Canada

Abstract

The present analysis examines the initiation of necessity and opportunity entrepreneurship ventures in Canada from the late 1980s until more recent times, to determine how these activities relate with the business cycle. The definitions of necessity and opportunity entrepreneurship mirror those in Fairlie and Fossen (2018). Unlike previous results for other countries, I find that in Canada, both necessity and opportunity entrepreneurship appear to be procyclical, with new ventures increasing as unemployment declines. These results hold after various robustness tests, including gender stratification are applied. The possibility of using these forms of entrepreneurship as leading or lagged indicators of recessions is also considered.