In particular, the citizens’ purchasing powers are systematically lowered over time and consequentially, the businesses cut back on production, investments, and employment levels. Additionally, the prolonged periods of unemployment are likely to result in the citizens becoming disenchanted with no hope for the future and, thus, they may even migrate to other countries. Hence, reductions in human capital and not surprisingly, the recessionary periods of the business cycle being further entrenched. And the prospects for short and long run economic growth are negatively affected, thus, the future appears bleak. The social costs also include increases in the divorce rates as a result of marital stresses which ultimately break up the family units (Lazarus, 1984; White and Rogers 2000; Lewin 2005; Hardie and Lucas 2010; Amato and Beattie 2011). Case in point, in Spain a country experiencing a prolonged period of high unemployment, in the aftermath of the 2005 Express Divorce Law which legalized divorces there was a 8 percent increase in the divorce …show more content…
Most interestingly, and in the context of our study the social changes which can arise from entrepreneurial activities can neutralize the negative effects of divorces on business creation (Rooney, 2013). In that respect, our study builds upon Saridakis et al. (2014) who showed that both macroeconomic and social conditions have significant influences on the male and female self-employment rates in the U.K. We investigate the presence and nature of both the long and short-run impacts of the economic conditions and the divorce rate on the self-employment rates in Spain. In our methodological approach, we not only move away from self-report data, but we also veer towards a more macroeconomic approach, that takes into consideration the two periods of financial crisis. Additionally, we build upon the econometric approach of Saridakis et al. (2014) by also, taking into consideration potential structural breaks. Thus, this paper sheds more light on the emerging literature with regards to the impact of divorces on self-employment over the time