How Evidential Pluralism Can Help Clarify the Nature of the Relationship Between Unemployment and Entrepreneurship

Abstract

In line with Shan and Williamson (2023 , Evidential pluralism in the social sciences, Routledge), this article argues that evidential pluralism used in the philosophical enquiry of causation can be employed to examine causal relationships in the business and economics disciplines. We focus on the relationship between unemployment and entrepreneurship, which has created heated and inconclusive debate in the economics of entrepreneurship field. Specifically, we suggest that discrepancies in the literature are due to: (a) the failure to fully capture the mechanism of the relationship; and (b) differences in the methodological and data analysis approaches used in existing studies. We therefore argue that if we want to explore the unemployment and entrepreneurship relationship, we need to capture the underlying pathways that bring together different forms of entrepreneurship and unemployment by considering, for example, structural and labour market factors that may alter the strength and/or direction of the relationship. The case study analysis provides strong support for the use of the evidential pluralism in establishing causal links. We argue that methodological diversity and mixed method approaches can be helpful for exploring mechanisms, but they can be somewhat problematic when examining correlation empirically. Here, the use of panel data may allow us to capture the statistical association more accurately than the use of other types of data and econometric modelling. Finally, we argue that exploring the mechanism ahead of the correlation can allow us to learn more about the underlying relationship among the variables, which can then be modelled and captured statistically. In contrast, examining correlation first can lead to misleading results. Overall, the article concludes that evidential pluralism used in the philosophy of causation can help us to understand causal links and establish causal claims for important economic relationships, allowing effective policy to be crafted. To this end, and as discussed in the evidential pluralism literature (see Russo, F., & Williamson, J. 2007, International Studies in the Philosophy of Science,21[2], 157–170; Shan, Y., & Williamson, J. 2023, Evidential pluralism in the social sciences, Routledge), evidence of both mechanisms and correlations should be used to support causal hypotheses made in economics and business research. However, we propose that before analysing the correlations, we should conceptually examine the mechanisms.