Self-Employment in Chile, long run trends and education and age structures changes

This paper studies long-term trends of self-employment in Chile. Self-employment is associated with poor job conditions, vulnerability, and instability or informal labor market. Contrary to what is expected, self- employment level does not respond to macroeconomic variables. Using forty-one cross sections of the longest Employment Survey available, we show that there is little correlation of the economic cycle with variations in self-employment. Cohort effects are also unimportant. In fact, age is the most important predictor of self- employment; older people are more likely to be self-employed. In addition, we performed a decomposition of changes in self-employment on changes in coefficients, which are a measure of the returns to individual characteristics, and on changes in characteristics. The results indicate that self-employment should have decreased given the changes in individual characteristics, but was prevented by changes in coefficients. We also find indirect evidence that these changes i