Entrepreneurship over the business cycle

•Documented necessity entrepreneurship in downturns could be incorrectly interpreted.•This is because employment is more sensitive than self-employment to business cycle.•Graduating in recessions reduces entrepreneurship probability for the next 11 years.•But this does not lower the probability of starting a business over the life cycle.

The fraction of self-employed rises in recessions because wage work is more sensitive than self-employment to the business cycle, not because of necessity entrepreneurship. Graduating during a recession reduces the probability of starting a business for the next 11 years.