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Self-employment in Spain: Transition and earnings differential

  • Gema Álvarez
  • Carlos Gradín
  • M. Soledad Otero

In this paper we analyze the factors that influence transitions into self-employment in Spain using a discrete time duration model, and, given the evidence of lower earnings among self-employees, we further explain the earnings differential between employees and self-employees using a Oaxaca-Blinder approach. The analysis is based on the European Community Household Panel (ECPH) for 1994-2001. According to our results, the factors explaining the transition into self-employment differ according to previous status in the labor market. In general, young males have a higher probability of entering selfemployment; but while for those previously out of the labor market the probability increases with higher education, the opposite is true for employees, and this may be due to the characteristics of their jobs. Additionally, we show that the observed earnings differential between self- and paid employees is a consequence of the selectivity bias into each labor status.

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Paper provided by Universidade de Vigo, Departamento de Economía Aplicada in its series Working Papers with number 0907.

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Length: 32 pages
Date of creation: Sep 2009
Date of revision:
Handle: RePEc:vig:wpaper:0907
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Web page: http://webx06.webs.uvigo.es/
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  1. Aysit Tansel, 2001. "Wage Earners, Self Employed and Gender in the Informal Sector in Turkey," Working Papers 0102, Economic Research Forum, revised Jan 2001.
  2. Thomas Leoni & Martin Falk, 2010. "Gender and field of study as determinants of self-employment," Small Business Economics, Springer, vol. 34(2), pages 167-185, February.
  3. Raquel Carrasco & Mette Ejrnæs, 2003. "Self-employment in Denmark and Spain: Institution, Economic Conditions and Gender differences," CAM Working Papers 2003-06, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  4. Johansson, Edvard, 2000. " Self-Employment and Liquidity Constraints: Evidence from Finland," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 123-34, March.
  5. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, August.
  6. Kidd, M.P., 1990. "Immigrant Wage Differentials And The Role Of Self- Employment In Australia," Papers 1990-07, Tasmania - Department of Economics.
  7. Hannu Tervo, 2006. "Regional unemployment, self-employment and family background," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 1055-1062.
  8. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
  9. Fujii, Edwin T. & Hawley, Clifford B., 1991. "Empirical aspects of self-employment," Economics Letters, Elsevier, vol. 36(3), pages 323-329, July.
  10. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, November.
  11. Yannis Georgellis & Howard J. Wall, 2004. "Gender differences in self-employment," Working Papers 1999-008, Federal Reserve Bank of St. Louis.
  12. David Blanchflower & A Oswald, 1991. "Self-Employment and Mrs Thatchers Enterprise," CEP Discussion Papers dp0030, Centre for Economic Performance, LSE.
  13. Mats Hammarstedt, 2004. "Self-Employment Among Immigrants in Sweden -- An Analysis of Intragroup Differences," Small Business Economics, Springer, vol. 23(2), pages 115-126, 09.
  14. Taylor, Mark P, 1996. "Earnings, Independence or Unemployment: Why Become Self-Employed?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 253-66, May.
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