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How Vulnerable are the Self-Employed? Evidence from Ugandan Small-Scale Entrepreneurs

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  • Tabea Lakemann

Abstract

Due to small firm sizes and inter-linkages between household and business finances, small-scale entrepreneurs in developing countries are inherently vulnerable to temporary and permanent income shortfalls, and hence household poverty. While the International Labour Organisation (ILO) generally defines self-employment without employees as vulnerable employment, little empirical research has been done on the extent to which the self-employed are indeed vulnerable. This paper makes two main contributions: first, it operationalises the concept of vulnerability in the context of self-employment in developing countries by defining vulnerability as the risk of having business income below a living wage threshold. Secondly, it investigates the extent and correlates of vulnerability. Using a six-year balanced entrepreneur panel dataset from Kampala, Uganda, it is shown that the self-employed are heterogeneous with respect to vulnerability and observed earnings: 58–74% of the samples are classified as vulnerable in a given year and mostly earn incomes below the living wage threshold. Vulnerable entrepreneurs are shown to be significantly different from non-vulnerable entrepreneurs in several dimensions, including those that do not directly predict income.

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  • Tabea Lakemann, 2023. "How Vulnerable are the Self-Employed? Evidence from Ugandan Small-Scale Entrepreneurs," Journal of Development Studies, Taylor & Francis Journals, vol. 59(9), pages 1391-1408, September.
    • Handle: RePEc:taf:jdevst:v:59:y:2023:i:9:p:1391-1408
    DOI: 10.1080/00220388.2023.2217996
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