Empirical Studies of Self-Employment



This paper presents a review of empirical studies of self-employment for the Australian, Canadian, Dutch, UK and US labour markets. Both cross-sectional and longitudinal studies are analysed. Analyses using cross-sectional data examine the propensity to be self-employed at any one point in time, whereas longitudinal studies focus on the transition into self-employment from wage/salary employment and the survival rate in this state over time. Various hypotheses advanced in the economics and sociology literatures on self-employment are tested. These include the relationship between managerial ability and the propensity to be self-employed and the impact of financial constraints on entry into self-employment stressed in economic models of entrepreneurship, and the relationships between self-employment choice and the nature of the work and group characteristics (e.g., ethnic enclaves) stressed in sociological models of entrepreneurship. The evidence shows that self-employment outcomes are significantly affected by factors such as individual abilities, family background, occupational status, liquidity constraints and ethnic enclaves.