IDEAS home Printed from https://ideas.repec.org/p/drm/wpaper/2021-3.html
   My bibliography  Save this paper

The policy drivers of self-employment: New evidence from Europe

Author

Listed:
  • Balázs Egert
  • Annabelle Mourougane
  • Mark Baker
  • Gábor Fülöp

Abstract

Using cross-country time series panel regressions for the last two decades, this paper seeks to identify the main policy and institutional factors that explain the share of self-employment across European countries. It looks at the aggregate share of self-employed as well as its breakdown by age, skill and gender. The generosity of unemployment benefits, and to a lesser extent, spending on active labour market policies appear to be robust determinants of the long-term share of self-employed in European countries. No significant relation could be identified between the stringency of employment protection and aggregate self-employment. However, there are significant, and oppositely signed, impacts on high- and low-skilled self-employed separately. Both the tax wedge and the minimum wage appear to be related positively to the share of self-employed in the long term, but the relation holds for some categories of workers only.

Suggested Citation

  • Balázs Egert & Annabelle Mourougane & Mark Baker & Gábor Fülöp, 2021. "The policy drivers of self-employment: New evidence from Europe," EconomiX Working Papers 2021-3, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2021-3
    as

    Download full text from publisher

    File URL: https://economix.fr/pdf/dt/2021/WP_EcoX_2021-3.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Åstebro, Thomas & Chen, Jing, 2014. "The entrepreneurial earnings puzzle: Mismeasurement or real?," Journal of Business Venturing, Elsevier, vol. 29(1), pages 88-105.
    2. Oecd, 2016. "New Forms of Work in the Digital Economy," OECD Digital Economy Papers 260, OECD Publishing.
    3. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
    4. Kanniainen, Vesa & Vesala, Timo, 2005. "Entrepreneurship and labor market institutions," Economic Modelling, Elsevier, vol. 22(5), pages 828-847, September.
    5. Anh T. Le, 1999. "Empirical Studies of Self‐Employment," Journal of Economic Surveys, Wiley Blackwell, vol. 13(4), pages 381-416, September.
    6. Hans J. Baumgartner & Marco Caliendo, 2008. "Turning Unemployment into Self‐Employment: Effectiveness of Two Start‐Up Programmes," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(3), pages 347-373, June.
    7. Lawrence F. Katz & Alan B. Krueger, 2016. "The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015," NBER Working Papers 22667, National Bureau of Economic Research, Inc.
    8. Taylor, Mark P, 1996. "Earnings, Independence or Unemployment: Why Become Self-Employed?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 253-266, May.
    9. Balázs Égert & Peter Gal & Isabelle Wanner, 2017. "Structural policy indicators database for economic research (SPIDER)," OECD Economics Department Working Papers 1429, OECD Publishing.
    10. George J. Borjas, 2021. "Self-Selection and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 4, pages 69-91, World Scientific Publishing Co. Pte. Ltd..
    11. Concepción Román & Emilio Congregado & José Millán, 2011. "Dependent self-employment as a way to evade employment protection legislation," Small Business Economics, Springer, vol. 37(3), pages 363-392, October.
    12. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    13. Henrik Jacobsen Kleven & Martin B. Knudsen & Claus Thustrup Kreiner & Søren Pedersen & Emmanuel Saez, 2011. "Unwilling or Unable to Cheat? Evidence From a Tax Audit Experiment in Denmark," Econometrica, Econometric Society, vol. 79(3), pages 651-692, May.
    14. Koellinger, Philipp & Minniti, Maria, 2009. "Unemployment benefits crowd out nascent entrepreneurial activity," Economics Letters, Elsevier, vol. 103(2), pages 96-98, May.
    15. Baumann, Florian & Brändle, Tobias, 2012. "Self-employment, educational attainment and employment protection legislation," Labour Economics, Elsevier, vol. 19(6), pages 846-859.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jean-Marc Zogheib & Marc Bourreau, 2021. "Public vs. Private Investments In Network Industries," EconomiX Working Papers 2021-4, University of Paris Nanterre, EconomiX.
    2. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    3. Nardo Vries & Werner Liebregts & André Stel, 2020. "Explaining entrepreneurial performance of solo self-employed from a motivational perspective," Small Business Economics, Springer, vol. 55(2), pages 447-460, August.
    4. Catherine Laffineur & Saulo Dubard Barbosa & Alain Fayolle & Emeran Nziali, 2017. "Active labor market programs’ effects on entrepreneurship and unemployment," Small Business Economics, Springer, vol. 49(4), pages 889-918, December.
    5. Altin Vejsiu, 2011. "Incentives to self-employment decision in Sweden," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(4), pages 379-403.
    6. repec:cii:cepiei:2014-q2-138-2 is not listed on IDEAS
    7. José María Millán & Emilio Congregado & Concepción Román, 2010. "Determinants of Self-Employment Dynamics and their Implications on Entrepreneurial Policy Effectiveness," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 72, pages 45-76.
    8. Joanna Woronkowicz & Douglas S. Noonan, 2019. "Who Goes Freelance? The Determinants of Self-Employment for Artists," Entrepreneurship Theory and Practice, , vol. 43(4), pages 651-672, July.
    9. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
    10. Sarah Brown & Lisa Farrell & Mark N. Harris & John G. Sessions, 2006. "Risk preference and employment contract type," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 169(4), pages 849-863, October.
    11. Jolanda Hessels & José María Millán & Concepción Román, 2015. "The Importance of Being in Control of Business: Work Satisfaction of Employers, Own-account Workers and Employees," Tinbergen Institute Discussion Papers 15-047/VII, Tinbergen Institute.
    12. Paul A. Coomes & Jose Fernandez & Stephan F. Gohmann, 2013. "The Rate of Proprietorship Among Metropolitan Areas: The Impact of the Local Economic Environment and Capital Resources," Entrepreneurship Theory and Practice, , vol. 37(4), pages 745-770, July.
    13. Andrew Burke & Serhiy Lyalkov & Ana Millán & José María Millán & André Stel, 2021. "How do country R&D change the allocation of self-employment across different types?," Small Business Economics, Springer, vol. 56(2), pages 695-721, February.
    14. Marcén, Miriam, 2013. "The effect of culture on self-employment," MPRA Paper 47338, University Library of Munich, Germany.
    15. Constant, Amelie F., 2004. "Immigrant versus Native Businesswomen: Proclivity and Performance," IZA Discussion Papers 1234, Institute of Labor Economics (IZA).
    16. Wiji Arulampalam & Andrea Papini, 2023. "Tax Progressivity and Self-Employment Dynamics," The Review of Economics and Statistics, MIT Press, vol. 105(2), pages 376-391, March.
    17. Alessandra Luzzi & Amir Sasson, 2016. "Individual Entrepreneurial Exit and Earnings in Subsequent Paid Employment," Entrepreneurship Theory and Practice, , vol. 40(2), pages 401-420, March.
    18. Emilio Congregado & Antonio A. Golpe & Vicente Esteve, 2019. "On the Substitutability between Paid-employment and Self-employment: Evidence from the Period 1969–2014 in the United States," Sustainability, MDPI, vol. 11(2), pages 1-17, January.
    19. Marcén, Miriam, 2014. "The role of culture on self-employment," Economic Modelling, Elsevier, vol. 44(S1), pages 20-32.
    20. Ignacio Moral-Arce & Javier Martín-Román & Ángel L. Martín-Román, 2019. "Cessation of Activity Benefit for Spanish Self-employed Workers: A Heterogeneous Impact Evaluation," Hacienda Pública Española / Review of Public Economics, IEF, vol. 231(4), pages 41-79, December.
    21. Peter van der Zwan & Ingrid Verheul & Roy Thurik & Isabel Grilo, 2009. "Entrepreneurial Progress: Climbing the Entrepreneurial Ladder in Europe and the US," Tinbergen Institute Discussion Papers 09-070/3, Tinbergen Institute, revised 17 Mar 2010.

    More about this item

    Keywords

    self-employment; labour market; labour market regulations; labour market institutions; Europe;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:drm:wpaper:2021-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valerie Mignon (email available below). General contact details of provider: https://edirc.repec.org/data/modemfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.