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Promoting self‐employment: Does it create more employment and business activity?

Author

Listed:
  • Gilbert Cette
  • Jimmy Lopez

Abstract

We assess the economic impact of reforms promoting self‐employment in the countries that have implemented such reforms since the early 2000s: the Netherlands, the United Kingdom, and France. To that end, we use a difference‐in‐differences approach on a cross‐country–industry panel database. Our results suggest that the reforms have raised the number of self‐employed workers, but mostly through a substitution effect between the self‐employed and employees, and not through a supply effect or a substitution effect with informal activities. This means that these reforms could have failed to achieve their main objectives.

Suggested Citation

  • Gilbert Cette & Jimmy Lopez, 2022. "Promoting self‐employment: Does it create more employment and business activity?," LABOUR, CEIS, vol. 36(1), pages 94-114, March.
    • Handle: RePEc:bla:labour:v:36:y:2022:i:1:p:94-114
    DOI: 10.1111/labr.12211
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    References listed on IDEAS

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    1. 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.
    2. Anna Milanez & Barbara Bratta, 2019. "Taxation and the future of work: How tax systems influence choice of employment form," OECD Taxation Working Papers 41, OECD Publishing.
    3. Lawrence F. Katz & Alan B. Krueger, 2016. "The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015," NBER Working Papers 22667, National Bureau of Economic Research, Inc.
    4. R. Glenn Hubbard & William M. Gentry, 2000. "Tax Policy and Entrepreneurial Entry," American Economic Review, American Economic Association, vol. 90(2), pages 283-287, May.
    5. Nicole Bosch & Henk-Wim de Boer, 2017. "The Elasticity of Taxable Income for the Self-Employed: Heterogeneity across Reforms and Income Levels," CPB Discussion Paper 354.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Nicole Bosch & Henk-Wim de Boer, 2017. "The Elasticity of Taxable Income for the Self-Employed: Heterogeneity across Reforms and Income Levels," CPB Discussion Paper 354, CPB Netherlands Bureau for Economic Policy Analysis.
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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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