IDEAS home Printed from https://ideas.repec.org/a/wly/jintdv/v29y2017i4p473-499.html
   My bibliography  Save this article

Self‐Employment and Queues for Wage Work: Evidence from Chile

Author

Listed:
  • Dante Contreras
  • Roberto Gillmore
  • Esteban Puentes

Abstract

Self‐employment can be considered as either the result of a self‐selection process or a reflection of rigidities and skill mismatch in the labour market or both. We estimate a double selection model where individuals queue for wage work instead of being self‐employed in the first stage, followed by employers selecting from the queue in the second. We find statistical support for the double selection model, implying that some individuals are self‐employed because they cannot find wage work, while other self‐select to be self‐employed. Individuals with higher education are more often chosen as wage workers, and belonging to an ethnic group decreases the likelihood of being chosen. Additionally, earnings equations suggest that high ability individuals perform better in both the wage work and self‐employment sectors. Copyright © 2015 John Wiley & Sons, Ltd.

Suggested Citation

  • Dante Contreras & Roberto Gillmore & Esteban Puentes, 2017. "Self‐Employment and Queues for Wage Work: Evidence from Chile," Journal of International Development, John Wiley & Sons, Ltd., vol. 29(4), pages 473-499, May.
    • Handle: RePEc:wly:jintdv:v:29:y:2017:i:4:p:473-499
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Todaro, Michael P, 1969. "A Model for Labor Migration and Urban Unemployment in Less Developed Countries," American Economic Review, American Economic Association, vol. 59(1), pages 138-148, March.
    2. 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.
    3. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Who are the microenterprise owners ? Evidence from Sri Lanka on Tokman v. de Soto," Policy Research Working Paper Series 4635, The World Bank.
    4. Paulson, Anna L. & Townsend, Robert, 2004. "Entrepreneurship and financial constraints in Thailand," Journal of Corporate Finance, Elsevier, vol. 10(2), pages 229-262, March.
    5. Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1994. "Entrepreneurial Decisions and Liquidity Constraints," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 334-347, Summer.
    6. Fábio Veras Soares, 2004. "Do Informal Workers Queue For Formal Jobs in Brazil ?," Discussion Papers 1021, Instituto de Pesquisa Econômica Aplicada - IPEA.
    7. Claudio Montenegro & Carmen Pagés, 2005. "Who Benefits from Labor Market Regulations? Chile 1960-1998," Central Banking, Analysis, and Economic Policies Book Series, in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.),Labor Markets and Institutions, edition 1, volume 8, chapter 4, pages 077-114, Central Bank of Chile.
    8. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
    9. Asea, Patrick K., 1996. "The informal sector: baby or bath water? A comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 163-171, December.
    10. John M. Abowd & Henry S. Farber, 1982. "Job Queues and the Union Status of Workers," ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
    11. Esteban Puentes & Dante Contreras & Claudia Sanhueza, 2007. "Self-Employment in Chile, long run trends and education and age structures changes," Estudios de Economia, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 203-247, December.
    12. Robert W. Fairlie & Bruce D. Meyer, 1996. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 757-793.
    13. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    14. Esteban Puentes & Dante Contreras, 2009. "Informal jobs and contribution to social security: Evidence from a double selection model," Working Papers wp307, University of Chile, Department of Economics.
    15. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    16. Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February.
    17. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-1526, November.
    18. Gong, Xiaodong & van Soest, Arthur, 2002. "Wage differentials and mobility in the urban labour market: a panel data analysis for Mexico," Labour Economics, Elsevier, vol. 9(4), pages 513-529, September.
    19. 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.
    20. David N. F. Bell & Robert A. Hart, 2003. "Wages, Hours, and Overtime Premia: Evidence from the British Labor Market," ILR Review, Cornell University, ILR School, vol. 56(3), pages 470-480, April.
    21. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    22. Georgios A. Panos & Konstantinos Pouliakas & Alexandros Zangelidis, 2014. "Multiple Job Holding, Skill Diversification, and Mobility," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(2), pages 223-272, April.
    23. Michael J. Pisani & José A. Pagán, 2003. "Sectoral Queuing in a Transitional Economy: The Case of Nicaragua in the 1990s," LABOUR, CEIS, vol. 17(4), pages 571-597, December.
    24. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, vol. 32(7), pages 1159-1178, July.
    25. Martin Huber & Giovanni Mellace, 2014. "Testing exclusion restrictions and additive separability in sample selection models," Empirical Economics, Springer, vol. 47(1), pages 75-92, August.
    26. Claudio Montenegro & Carmen Pagés, 2005. "Who Benefits from Labor Market Regulations? Chile 1960-1998," Central Banking, Analysis, and Economic Policies Book Series,in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.), Labor Markets and Institutions, edition 1, volume 8, chapter 4, pages 077-114 Central Bank of Chile.
    27. 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.
    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. Tefera,Girum Abebe & Buehren,Niklas & Goldstein,Markus P., 2020. "Short-Run Welfare Impacts of Factory Jobs : Experimental Evidence from Ethiopia," Policy Research Working Paper Series 9325, The World Bank.
    2. Central Bank of Chile, 2023. "Inflation and labour markets in the wake of the pandemic: the case of Chile," BIS Papers chapters, in: Bank for International Settlements (ed.), Inflation and labour markets, volume 127, pages 67-84, Bank for International Settlements.
    3. Pablo García, 2023. "Inflation and Labour Markets in the Wake of the Pandemic: The Case of Chile," Economic Policy Papers Central Bank of Chile 73, Central Bank of Chile.

    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. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, December.
    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. Robert W. Fairlie, 2013. "Minority and immigrant entrepreneurs: access to financial capital," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 8, pages 153-175, Edward Elgar Publishing.
    4. repec:cii:cepiei:2014-q2-138-2 is not listed on IDEAS
    5. Federico S. Mandelman & Gabriel Montes-Rojas, 2007. "Microentrepreneurship and the business cycle: is self-employment a desired outcome?," FRB Atlanta Working Paper 2007-15, Federal Reserve Bank of Atlanta.
    6. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
    7. Magnus Lofstrom & Chunbei Wang, 2007. "Mexican-Hispanic Self-Employment Entry: The Role of Business Start-Up Constraints," The ANNALS of the American Academy of Political and Social Science, , vol. 613(1), pages 32-46, September.
    8. Earle, John S. & Sakova, Zuzana, 1999. "Entrepreneurship from Scratch: Lessons on the Entry Decision into Self-Employment from Transition Economies," IZA Discussion Papers 79, Institute of Labor Economics (IZA).
    9. Robert W. Fairlie, 2002. "Drug Dealing and Legitimate Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 538-567, July.
    10. Blanchflower, David G., 2000. "Self-employment in OECD countries," Labour Economics, Elsevier, vol. 7(5), pages 471-505, September.
    11. Yannis Georgellis & Howard Wall, 2005. "Gender differences in self-employment," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(3), pages 321-342.
    12. Fairlie, Robert W, 1999. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 80-108, January.
    13. Faggio, Giulia & Silva, Olmo, 2014. "Self-employment and entrepreneurship in urban and rural labour markets," Journal of Urban Economics, Elsevier, vol. 84(C), pages 67-85.
    14. Schäfer, Dorothea & Talavera, Oleksandr & Weir, Charlie, 2011. "Entrepreneurship, windfall gains and financial constraints: Evidence from Germany," Economic Modelling, Elsevier, vol. 28(5), pages 2174-2180, September.
    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. David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 2003. "Discrimination in the Small-Business Credit Market," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 930-943, November.
    17. Harding, John P. & Rosenthal, Stuart S., 2017. "Homeownership, housing capital gains and self-employment," Journal of Urban Economics, Elsevier, vol. 99(C), pages 120-135.
    18. Blumberg, Boris F. & Pfann, Gerard A., 2015. "Roads Leading to Self-Employment: Comparing Transgenerational Entrepreneurs and Self-Made Start-Ups," IZA Discussion Papers 9155, Institute of Labor Economics (IZA).
    19. Pham, Tho & Talavera, Oleksandr & Zhang, Mao, 2018. "Self-employment, financial development, and well-being: Evidence from China, Russia, and Ukraine," Journal of Comparative Economics, Elsevier, vol. 46(3), pages 754-769.
    20. Magnus Lofstrom, 2013. "Does self-employment increase the economic well-being of low-skilled workers?," Small Business Economics, Springer, vol. 40(4), pages 933-952, May.
    21. Robert W. Fairlie & Alicia M. Robb, 2007. "Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 25(2), pages 289-323.

    More about this item

    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:wly:jintdv:v:29:y:2017:i:4:p:473-499. 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: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/journal/5102/home .

    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.