A decomposition of the growth in self-employment

Abstract

We decompose the rise of self-employment in the Netherlands in the period 1992 to 2006. Using Logit estimates we identify the most important determinants of the recent upturn, separately for women and for men. In contrast with findings for the United States, we find that changes in the industrial composition only play a small role. For women, we find that intra-sectoral developments have been important in spurring self-employment. In particular, it has become more common for women to be self-employed in the Trade and Culture sectors. The ageing of society (older people are more often self-employed) is an important cause of the observed increase. This effect is partly compensated by the negative effect of a higher educated labour force. The estimation results imply that both policies to foster self-employment and a socio-cultural trend have been important. We postulate that generic policy effects have been the most important cause of the increase in self-employment. The largest effects were seen just in the last few years of our sample (2004–2006), which appears to be inconsistent with the notion of a longer lasting socio-cultural trend.

Keywords:

• self-employment
• trend
• decomposition

JEL Classification:

• J11
• J21
• J23

Acknowledgements

The authors thank Andre van Stel, Robin Douhan, Nicole Bosch and Mark Roscam Abbing for their valuable comments on earlier versions of this article.