IDEAS home Printed from https://ideas.repec.org/p/vig/wpaper/0907.html
   My bibliography  Save this paper

Self-employment in Spain: Transition and earnings differential

Author

Listed:
  • Gema Álvarez
  • Carlos Gradín
  • M. Soledad Otero

Abstract

In this paper we analyze the factors that influence transitions into self-employment in Spain using a discrete time duration model, and, given the evidence of lower earnings among self-employees, we further explain the earnings differential between employees and self-employees using a Oaxaca-Blinder approach. The analysis is based on the European Community Household Panel (ECPH) for 1994-2001. According to our results, the factors explaining the transition into self-employment differ according to previous status in the labor market. In general, young males have a higher probability of entering selfemployment; but while for those previously out of the labor market the probability increases with higher education, the opposite is true for employees, and this may be due to the characteristics of their jobs. Additionally, we show that the observed earnings differential between self- and paid employees is a consequence of the selectivity bias into each labor status.

Suggested Citation

  • Gema Álvarez & Carlos Gradín & M. Soledad Otero, 2009. "Self-employment in Spain: Transition and earnings differential," Working Papers 0907, Universidade de Vigo, Departamento de Economía Aplicada.
    • Handle: RePEc:vig:wpaper:0907
    as

    Download full text from publisher

    File URL: https://webx06.webs8.uvigo.es/wp-content/uploads/2023/11/wp0907.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    2. Kidd, Michael P, 1993. "Immigrant Wage Differentials and the Role of Self-Employment in Australia," Australian Economic Papers, Wiley Blackwell, vol. 32(60), pages 92-115, June.
    3. Fujii, Edwin T. & Hawley, Clifford B., 1991. "Empirical aspects of self-employment," Economics Letters, Elsevier, vol. 36(3), pages 323-329, July.
    4. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    5. Yannis Georgellis & Howard Wall, 2005. "Gender differences in self-employment," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(3), pages 321-342.
    6. repec:bla:scandj:v:102:y:2000:i:1:p:123-34 is not listed on IDEAS
    7. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, November.
    8. Hannu Tervo, 2006. "Regional unemployment, self-employment and family background," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 1055-1062.
    9. Devine, Theresa J, 1994. "Changes in Wage-and-Salary Returns to Skill and the Recent Rise in Female Self-Employment," American Economic Review, American Economic Association, vol. 84(2), pages 108-113, May.
    10. 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.
    11. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    12. Mats Hammarstedt, 2004. "Self-Employment Among Immigrants in Sweden -- An Analysis of Intragroup Differences," Small Business Economics, Springer, vol. 23(2), pages 115-126, September.
    13. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
    14. Thomas Leoni & Martin Falk, 2010. "Gender and field of study as determinants of self-employment," Small Business Economics, Springer, vol. 34(2), pages 167-185, February.
    15. David Blanchflower & A Oswald, 1991. "Self-Employment and Mrs Thatchers Enterprise," CEP Discussion Papers dp0030, Centre for Economic Performance, LSE.
    16. Raquel Carrasco & Mette Ejrnæs, 2003. "Self-employment in Denmark and Spain: Institution, Economic Conditions and Gender differences," CAM Working Papers 2003-06, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    17. Blanchflower, David G & Meyer, Bruce D, 1994. "A Longitudinal Analysis of the Young Self-Employed in Australia and the United States," Small Business Economics, Springer, vol. 6(1), pages 1-19, February.
    18. Aysit Tansel, 2001. "Wage Earners, Self Employed and Gender in the Informal Sector in Turkey," Working Papers 0102, Economic Research Forum, revised 01 Nov 2001.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mbratana, Taoufiki & Kenne Fotié, Andrée, 2017. "Investigating Gender Wage Gap in Employment: A Microeconometric Type-Analysis for Cameroon," MPRA Paper 78039, University Library of Munich, Germany.
    2. Lechmann, Daniel S. J. & Schnabel, Claus, 2012. "What Explains the Gender Earnings Gap in Self-Employment? A Decomposition Analysis with German Data," IZA Discussion Papers 6435, Institute of Labor Economics (IZA).
    3. Mbratana, Taoufiki & Kenne Fotié, Andrée, 2017. "Investigating Gender Wage Gap in Employment: A Microeconometric Type-Analysis for Cameroon," MPRA Paper 78092, University Library of Munich, Germany.

    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. Gema Álvarez & Carlos Gradín & Mª Soledad Otero, 2013. "Self-Employment: Transition And Earnings Differential," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 21(2), pages 61-90, Autumn.
    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. Yannis Georgellis & Howard Wall, 2005. "Gender differences in self-employment," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(3), pages 321-342.
    4. Lo, Kuang-Ta & Pan, Jiun-Nan & Peng, Shi-Shu, 2020. "The role of gender and its potential channels to affect self-employment in Taiwan," Economic Modelling, Elsevier, vol. 89(C), pages 601-610.
    5. Blanchflower, David G., 2000. "Self-employment in OECD countries," Labour Economics, Elsevier, vol. 7(5), pages 471-505, September.
    6. Flèche, Sarah & Lepinteur, Anthony & Powdthavee, Nattavudh, 2021. "The importance of capital in closing the entrepreneurial gender gap: A longitudinal study of lottery wins," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 591-607.
    7. Blanchflower, David G. & Shadforth, Chris, 2007. "Entrepreneurship in the UK," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 3(4), pages 257-364, July.
    8. Altin Vejsiu, 2011. "Incentives to self-employment decision in Sweden," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(4), pages 379-403.
    9. Guataqui, Juan Carlos & García Suaza, Andrés Felipe & Rodríguez, Mauricio, 2009. "Estimaciones de los determinantes de los ingresos laborales en Colombia con consideraciones diferenciales para asalariados y cuenta propia," Documentos de Trabajo 5756, Universidad del Rosario.
    10. Inmaculada Garc�a Mainar & V�ctor M. Montuenga G�mez, 2004. "Returns to education and to experience within the EU: are there differences between wage earners and the self-employed?," Documentos de Trabajo dt2004-08, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    11. Kim, GiSeung, 2007. "The analysis of self-employment levels over the life-cycle," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(3), pages 397-410, July.
    12. Werner, Arndt & Moog, Petra, 2009. "Why do Employees Leave Their Jobs for Self-Employment? – The Impact of Entrepreneurial Working Conditions in Small Firms," MPRA Paper 18826, University Library of Munich, Germany.
    13. Guillaume Destré & Valentine Henrard, 2004. "The determinants of occupational choice in Colombia: an empirical analysis," Cahiers de la Maison des Sciences Economiques bla04065a, Université Panthéon-Sorbonne (Paris 1).
    14. Nathalie Colombier & David Masclet, 2008. "Intergenerational correlation in self employment: some further evidence from French ECHP data," Small Business Economics, Springer, vol. 30(4), pages 423-437, April.
    15. Giuliano Guerra & Roberto Patuelli, 2016. "The Role of Job Satisfaction in Transitions into Self–Employment," Entrepreneurship Theory and Practice, , vol. 40(3), pages 543-571, May.
    16. repec:cii:cepiei:2014-q2-138-2 is not listed on IDEAS
    17. Mirjam Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2013. "The higher returns to formal education for entrepreneurs versus employees," Small Business Economics, Springer, vol. 40(2), pages 375-396, February.
    18. Dimova, Ralitza & Gang, Ira N., 2007. "Self-selection and wages during volatile transition," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 612-629, September.
    19. Williams, Donald R., 2000. "Consequences of self-employment for women and men in the United States," Labour Economics, Elsevier, vol. 7(5), pages 665-687, September.
    20. Howard J. Wall & Yannis Georgellis, 2000. "What makes a region entrepreneurial? Evidence from Britain," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(3), pages 385-403.
    21. Bruce, Donald, 2000. "Effects of the United States tax system on transitions into self-employment," Labour Economics, Elsevier, vol. 7(5), pages 545-574, September.

    More about this item

    Keywords

    Self-employment; longitudinal data; duration model; earnings differential.;
    All these keywords.

    JEL classification:

    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

    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:vig:wpaper:0907. 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: Departamento de Economía Aplicada (email available below). General contact details of provider: https://edirc.repec.org/data/deviges.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.