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The Effect of Self-Employment on Income Inequality

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  • Schneck, Stefan

Abstract

It is well known that the self-employed are over-represented at the bottom as well as the top of the income distribution. This paper shifts the focus from the income situation of the self-employed to the distributive effects of a change in self-employment rates. With representative German data and unconditional quantile regression analysis we show that an increase in the proportion of self-employed individuals in the labor force increases income polarization by tearing down floors at the bottom and allowing higher earnings potentials at the very top of the hourly income distribution. Recentered influence function regression of inequality measures corroborate that self-employment is a source of income inequality in the labor market.

Suggested Citation

  • Schneck, Stefan, 2018. "The Effect of Self-Employment on Income Inequality," GLO Discussion Paper Series 281, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:281
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    More about this item

    Keywords

    income; earnings inequality; self-employment;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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