Entrepreneurship and the Welfare State. A Reply

Reprint No. 2006:11

Author(s): Magnus HenreksonYear: 2006 Title: Industrial and Corporate Change Volume (No.): 15 (3) Pages: 579–593

It is widely recognized that the supply of entrepreneurial talent is likely to be important for economic growth, innovation, and job creation. In Henrekson (2005, Industrial and Corporate Change, 14(3), 437-467), it was shown that the supply of productive entrepreneurship is likely to be reduced by the kind of tax and welfare arrangements that prevail in a mature welfare state. Welfare state institutions developed mostly during a period when it was common among politicians and economists to assume that individual entrepreneurship and new firms were of minor importance. However, in an environment where entry, exit, and turnover of firms are important for growth, and where scale economies are less important, this kind of model may be more problematic. There are a number of measures that can be implemented to strengthen entrepreneurial incentives within extensive welfare states, but their implementation is unlikely because there are strong vested interests, including the incumbent business elite, defending the current model.

A number of objections against this analysis have been raised by James K. Galbraith and Ronald Dore in the previous issue of Industrial and Corporate Change. In this reply, it is shown that these objections are either largely unfounded or just misunderstandings.

Henrekson, Magnus (2006), "Entrepreneurship and the Welfare State. A Reply". Industrial and Corporate Change 15(3), 579–593.

Magnus Henrekson


Ph: +46 (0)8 665 4502

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.


Seminars organized by IFN


To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se