Entrepreneurship versus Joblessness: Explaining the Rise in Self-Employment
AbstractThe self-employed constitute a large proportion of the workforce in developing countries and the sector is growing. Different accounts exist as to the causes of this development, with pull factors such as high returns to capital contrasted with push factors such as barriers to more desirable salaried jobs. Using data from Ghana, we investigate the changing structure of earnings in self-employment relative to salaried work. We decompose earnings in a two-sector labour market allowing for flexible patterns of sorting on unobservables by means of a correlated random coefficient model estimated by IV-GMM. A unique panel dataset provides us with suitable instruments to tackle the endogeneity of sector choice and capital accumulation. We show that returns to productive characteristics in SE have increased significantly over the period 2004-11 and the sector has attracted workers with higher skills. We conclude that pull factors have significantly strengthened, pointing against the grim view of self-employment as an occupation of last resort.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1334.
Length: 57 p.
Date of creation: 2013
Date of revision:
Self-employment; semiparametric models; comparative advantage; segmentation; African labour markets;
Other versions of this item:
- Haywood, Luke & Falco, Paolo, 2013. "Entrepreneurship versus Joblessness - Explaining the Rise in Self-Employment," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80016, Verein für Socialpolitik / German Economic Association.
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
This paper has been announced in the following NEP Reports:
- NEP-AFR-2013-11-14 (Africa)
- NEP-ALL-2013-11-14 (All new papers)
- NEP-DEV-2013-11-14 (Development)
- NEP-ENT-2013-11-14 (Entrepreneurship)
- NEP-IUE-2013-11-14 (Informal & Underground Economics)
- NEP-LAB-2013-11-14 (Labour Economics)
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