IDEAS home Printed from
   My bibliography  Save this paper

Unraveling the relationship between the business cycle and the own-account worker's decision to hire employees


  • André van Stel
  • José Maria Millán
  • Concepcion Roman
  • Ana Millán


We study the role of the business cycle in the individual decision of own-account workers to hire employees. Using panel data from the European Community Household Panel for the EU-15 countries, we show that own-account workers are less likely to hire employees during recessions. Next, we focus on identifying the underlying mechanisms of this negative relationship, while bearing in mind that liquidity constraints and unemployment are more common during recessions. First, we observe how liquidity constraints reduce the probability of transitioning from own-account worker to employer. Second, we find that non-higher educated own-account workers who were formerly unemployed are less likely to take on employees compared to those who were formerly in paid employment. This lower likelihood does however not seem to apply to formerly unemployed own-account workers who enjoyed tertiary education. These and other results from the paper suggest that formal education and former work experience are important assets for own-account workers which increase the probability that they create new jobs.

Suggested Citation

  • André van Stel & José Maria Millán & Concepcion Roman & Ana Millán, 2014. "Unraveling the relationship between the business cycle and the own-account worker's decision to hire employees," Scales Research Reports H201302, EIM Business and Policy Research.
  • Handle: RePEc:eim:papers:h201302

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
    2. José Millán & Emilio Congregado & Concepción Román, 2012. "Determinants of self-employment survival in Europe," Small Business Economics, Springer, vol. 38(2), pages 231-258, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eim:papers:h201302. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster EIM). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.