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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
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    References listed on IDEAS

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    Cited by:

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    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.

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    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

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