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Dependent self-employment across Europe: involuntariness, country's wealth and labor market institutions

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  • Carrasco, Raquel
  • Hernanz, Virginia

Abstract

This paper investigates the degree of involuntariness in the entrepreneurial activity ofthe dependent solo self-employed, as well as the effect of the country's wealth and labormarket institutions. Using the unique information available in the 2017 European LaborForce Survey (EU-LFS) for 25 countries, we can properly identify the dependent soloself-employed and analyze to what extent they behave in accordance with anoccupational choice model when making their self-employment decision. For that, weaccount for the reasons why they enter into self-employment (voluntarily orinvoluntarily either out of necessity or requested by the former employer). The resultsindicate that involuntary self-employment, mostly due to being required by previousemployer, significantly increases the probability of being dependent solo versus nondependent self-employed. The wealthiest countries have a lower incidence of this groupof workers, mainly if they are involuntary self-employed. Moreover, labor marketinstitutions that decrease the flexibility of paid employment tend to increase theincidence of dependent solo self-employment. These results point to this group ofworkers being particularly vulnerable with the degree of vulnerability significantlyincreasing for those self-employed with a lesser degree of occupational choice.

Suggested Citation

  • Carrasco, Raquel & Hernanz, Virginia, 2021. "Dependent self-employment across Europe: involuntariness, country's wealth and labor market institutions," UC3M Working papers. Economics 31788, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:31788
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    2. Joanna Florek & Dorota Czerwinska-Kayzer, 2025. "Profitability of Self-Employment in Poland after the Introduction of the Polish Deal Regulations Compared to Other EU Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 316-333.
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    Keywords

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    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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