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Rising Self-employment in the Midst of High Unemployment: An Empirical Analysis of Recent Developments in Canada

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  • Lin, Zhengxi
  • Picot, Garnett
  • Yates, Janice

Abstract

This paper highlights recent developments in self-employment in Canada and explores its relationship to unemployment/full-time paid-employment. There are now two and a half million Canadians working at their own businesses, amounting to 16.2% of the total labour force or accounting for 17.8% of total employment. In the first eight years of the 1990s, self-employment on average expanded by 4.1% per year, contributing to over three out of four new jobs the economy has created. Entry and exit data demonstrate that there are substantial flows into and out of this sector of the economy. Gross flows into and out of self-employment as the main labour market activity averaged nearly half a million per year between 1982 and 1994, amounting to 42% of the total self-employed population. The fixed-effects modelling results show a statistically significant but empirically small negative (positive) relationship between self-employment and unemployment (full-time paid- employment). This conclusion holds true across different data sources, for different time periods, for different measures and definitions, for different empirical samples, and across various estimating techniques. There is also a statistically significant but empirically small negative (positive) relationship between exits out of self-employment and unemployment (full-time paid- employment). It appears that a host of non-cyclical factors are behind the recent surge in self-employment.

Suggested Citation

  • Lin, Zhengxi & Picot, Garnett & Yates, Janice, 1999. "Rising Self-employment in the Midst of High Unemployment: An Empirical Analysis of Recent Developments in Canada," Analytical Studies Branch Research Paper Series 1999133e, Statistics Canada, Analytical Studies Branch.
    • Handle: RePEc:stc:stcp3e:1999133e
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    File URL: https://www150.statcan.gc.ca/n1/en/catalogue/11F0019M1999133
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    References listed on IDEAS

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    Cited by:

    1. Carol Moore & Richard Mueller, 2002. "The transition from paid to self-employment in Canada: the importance of push factors," Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 791-801.
    2. Kevin Milligan, 2005. "Life‐cycle asset accumulation and allocation in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(3), pages 1057-1106, August.
    3. Garnett Picot & Andrew Heisz, 2000. "The Performance of the 1990s Canadian Labour Market," Canadian Public Policy, University of Toronto Press, vol. 26(s1), pages 7-25, July.
    4. Nadja Kamhi & Danny Leung, 2005. "Recent Developments in Self-Employment in Canada," Staff Working Papers 05-8, Bank of Canada.
    5. Picot, Garnett & Heisz, Andrew & Nakamura, A., 2001. "Job Tenure, Worker Mobility and the Youth Labour Market During the 1990s," Analytical Studies Branch Research Paper Series 2001155e, Statistics Canada, Analytical Studies Branch.
    6. repec:ags:inpuer:188875 is not listed on IDEAS
    7. Baldwin, John R. Chowhan, James, 2003. "The Impact of Self-employment on Labour-productivity Growth: A Canada and United States Comparison," Economic Analysis (EA) Research Paper Series 2003016e, Statistics Canada, Analytical Studies Branch.
    8. Laporte, Christine & Rivard, Maud-Catherine & Finnie, Ross, 2002. "Setting up Shop: Self-employment Amongst Canadian College and University Graduates," Analytical Studies Branch Research Paper Series 2002183e, Statistics Canada, Analytical Studies Branch.

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