Unemployment and Aspirations : The Moderating Role of Education

This paper examines how the interactions between changes in regional rates of unemployment and nascent entrepreneurs' higher education and entrepreneurship training affect entrepreneurial growth aspirations in the context of an economic slowdown. Recent studies have suggested that the formation of growth aspirations is driven by both the individual attributes of entrepreneurs and the environmental conditions in which the new firm formation process takes place. However, little is known about the joint effect of individual and the environment, particularly in the context of an economic crisis. The paper increases our knowledge of the combined effects of entrepreneurs' educational background and the regional economic environment on entrepreneurial growth aspirations. Based on entrepreneurial judgment arguments, the study proposes that individuals' higher education and entrepreneurship training will moderate the impact of regional unemployment rate changes on growth aspirations. We use data that combines individual-level information obtained from the Global Entrepreneurship Monitor project in Spain with province-level information gathered from the Spanish Statistics Institute during a recessive period (2008-2010). The results from a series of multi-level regressions indicate that the economic environment does not affect all entrepreneurs equally. While the negative effect of an increase in the unemployment rate reduces growth aspirations of entrepreneurs irrespective of their formal education level, the aspirations of those with entrepreneurship training are not influenced by changes in unemployment rates