This study aims to examine the dynamic relationship between entrepreneurship and unemployment in Vietnam over 1991–2024, using the self-employment (SE) rate as a proxy for entrepreneurial activity. Specifically, it investigates whether unemployment pushes individuals into SE in the short run and whether SE contributes to lower unemployment in the long run, thereby testing whether the entrepreneurship–unemployment nexus is temporally asymmetric in a transition-economy context.
The study uses annual time-series data for Vietnam from 1991 to 2024, with SE as a proxy for entrepreneurial activity and unemployment as the main labor-market outcome. After testing stationarity using Augmented Dickey–Fuller, Phillips–Perron and Kwiatkowski–Phillips–Schmidt–Shin procedures, the analysis applies a bidirectional autoregressive distributed lag error-correction framework to estimate short-run and long-run relationships, controlling for economic growth and inflation. Bounds testing is used to assess cointegration and Granger-causality tests within the ECM setting are used to evaluate directional effects and temporal asymmetry between unemployment and self-employment (SE).
The results provide supportive evidence of temporal asymmetry in Vietnam’s entrepreneurship–unemployment nexus. In the long run, SE is negatively and significantly associated with unemployment, suggesting that entrepreneurial activity contributes to labor absorption over time. By contrast, unemployment does not significantly increase SE in long-run equilibrium. Short-run evidence for an unemployment-push mechanism is weak and only marginally supported by Granger causality. Overall, SE in Vietnam appears more relevant to gradual labor-market adjustment than to immediate countercyclical unemployment reduction, although the cointegration evidence remains moderate and partly borderline.
This study adds value in three ways. First, it reframes the entrepreneurship–unemployment nexus in Vietnam through a temporal-asymmetry perspective, distinguishing short-run unemployment-push dynamics from longer-run unemployment-reducing effects. Second, it provides long-horizon country-specific evidence from a transition economy where SE remains a dominant form of entrepreneurial participation but is underrepresented in the literature. Third, it shows why the labor-market effects of entrepreneurship should not be inferred from entry alone but interpreted in relation to entrepreneurial quality, institutional context and the time required for employment effects to emerge.
