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Self-employment and earning inequality

Author

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  • Jean-Marc Falter

    (University of Geneva)

Abstract

The present study attempts to explain the difference in observed earning inequality between self-employment and wage-employment in Switzerland in 1992, 1995 and 2000. We use several measures of inequality in order both to determine the factors affecting income dispersion in the two groups and to identify the variables that drive the earning inequality differential. Thus, we make use of discrete decomposition techniques and of a regression-based method. The latter allows us to introduce a selection term in our decompositions which is of crucial importance in the case of self-employment. Our results indicate that education- and age-related variables, like work experience and tenure, are the most important factors explaining the inequality level in both groups. The importance of these factors seems, however, to be larger in the wage-employment sector. The reason may lie in the process of selection into selfemployment rather than in the differences in the returns to characteristics between the two sectors.

Suggested Citation

  • Jean-Marc Falter, 2007. "Self-employment and earning inequality," Journal of Income Distribution, Ad libros publications inc., vol. 16(2), pages 106-127, June.
    • Handle: RePEc:jid:journl:y:2007:v:16:i:2:p:106-127
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    Citations

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    Cited by:

    1. Murat Yalcintas & Oyk㜠Iyigãœn & Gokhan Karabulut, 2023. "Personal Characteristics And Intention For Entrepreneurship," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(02), pages 539-561.
    2. Cristiano Perugini & Ekaterina Selezneva, 2015. "Labour market institutions, crisis and gender earnings gap in Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(3), pages 517-564, July.
    3. Pedro Albarran & Raquel Carrasco & Maite Martinez‐Granado, 2009. "Inequality for Wage Earners and Self‐Employed: Evidence from Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(4), pages 491-518, August.
    4. Sadaf Sadaf, 2024. "Income and consumption inequality trends: a comparative analysis between paid employees and the self-employed," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 58(1), pages 1-25, December.
    5. Cristiano Perugini & Gaetano Martino, 2008. "Income Inequality Within European Regions: Determinants And Effects On Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 373-406, September.
    6. repec:ehu:dfaeii:6707 is not listed on IDEAS
    7. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    8. Skriabikova, Olga J. & Dohmen, Thomas & Kriechel, Ben, 2014. "New evidence on the relationship between risk attitudes and self-employment," Labour Economics, Elsevier, vol. 30(C), pages 176-184.
    9. Saurabh & R. V. Ramanamurthy, 2023. "Employment status and wealth inequality between scheduled caste and other caste households in India," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 25(1), pages 1-16, June.

    More about this item

    Keywords

    inequality decomposition; self-employment; income differential;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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