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The dynamics of solo self-employment: Persistence and transition to employership

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  • Lechmann, Daniel S.J.
  • Wunder, Christoph

Abstract

This study examines dynamics of solo self-employment. In particular, we investigate the extent of true state dependence and cross state dependence, i.e., whether experiencing solo self-employment causally affects the probability of becoming an employer in the future. We use data from the German Socio-Economic Panel to estimate dynamic multinomial logit models. Our results show that the extent of true (cross) state dependence is rather small. The observed persistence in solo self-employment as well as transitions from solo self-employment to employership can largely be explained by observed and unobserved heterogeneity.

Suggested Citation

  • Lechmann, Daniel S.J. & Wunder, Christoph, 2017. "The dynamics of solo self-employment: Persistence and transition to employership," Labour Economics, Elsevier, vol. 49(C), pages 95-105.
    • Handle: RePEc:eee:labeco:v:49:y:2017:i:c:p:95-105
    DOI: 10.1016/j.labeco.2017.09.002
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    Citations

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    Cited by:

    1. Jan Brzozowski & Anke Lasek, 2019. "The impact of self-employment on the economic integration of immigrants: Evidence from Germany," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 15(2), pages 11-28.
    2. Mario Bossler, 2019. "The Rise in Orientation at Collective Bargaining Without a Formal Contract," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(1), pages 17-45, January.
    3. Amjad Naveed & Nisar Ahmad & Rayhaneh Esmaeilzadeh & Amber Naz, 2019. "Self-Employment Dynamics of Immigrants and Natives: Individual-level Analysis for the Canadian Labour Market," Sustainability, MDPI, vol. 11(23), pages 1-22, November.
    4. Nivala, Annika, 2024. "(No) Effects of Subsidizing the First Employee: Evidence of a Low Take-up Puzzle Among Firms," Working Papers 166, VATT Institute for Economic Research.
    5. Cowling, Michael Leith & Wooden, Mark, 2021. "Does solo self-employment serve as a ‘stepping stone’ to employership?," Labour Economics, Elsevier, vol. 68(C).
    6. Stefan Schneck, 2020. "Self-employment as a source of income inequality," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(1), pages 45-64, March.
    7. Schneck, Stefan, 2018. "The effect of self-employment on income inequality," Working Papers 05/18, Institut für Mittelstandsforschung (IfM) Bonn.
    8. Cizek, Pavel & Sadikoglu, Serhan, 2022. "Nonseparable Panel Models with Index Structure and Correlated Random Effects," Other publications TiSEM 7899deb9-0eda-47e6-a3b8-2, Tilburg University, School of Economics and Management.
    9. Elisabeth Lopez-Perez & Ana Rodriguez-Santiago & Emilio Congregado, 2020. "Persistence in Self-Employment Rates before the Great Lockdown: The Case of the UK," Sustainability, MDPI, vol. 12(16), pages 1-13, August.
    10. Annika Nivala, 2024. "(No) Effects of Subsidizing the First Employee: Evidence of a Low Take-up Puzzle Among Firms," Working Papers 23, Finnish Centre of Excellence in Tax Systems Research.
    11. Joern H. Block & Christian Fisch & Mirko Hirschmann, 2022. "The determinants of bootstrap financing in crises: evidence from entrepreneurial ventures in the COVID-19 pandemic," Small Business Economics, Springer, vol. 58(2), pages 867-885, February.
    12. Caliendo, Marco & Fossen, Frank M. & Kritikos, Alexander S., 2022. "Personality characteristics and the decision to hire," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 31(3), pages 736-761.

    More about this item

    Keywords

    State dependence; Dynamic multinomial logit; Solo self-employment; Own-account worker; Stepping stone; German SOEP;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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