Unemployment and Family Businesses in Hungary

The innovative and growth potential of new start-ups is often questioned on the basis that many new entrants only find themselves in the private sector due to loss of jobs in the shrinking public sector. The paper explores one plausible route to this kind of self-employment. Using labour force survey data for 1992-1999 it examines the potential role of family businesses in helping the self-employment entry of individuals who would otherwise have difficulty in finding a job. Results suggest that hiring strategies are influenced by a tendency to undervalue leisure and by the reliability of labour supplied by family members.