Modelling the location of self-employed workers in urban areas

ABSTRACT

In this article, we develop an urban model for self-employment where leisure and effort at work are complementary. Our model shows that unemployment tends to be concentrated far from business districts, in contrast to employment and self-employment. The self-employed tend to live closer to workplaces than do the employed, as commuting affects productivity and thus earnings. We use the American Time Use Survey to test the model and find that employment and self-employment are negatively related to commuting, in comparison to unemployment, while self-employment is associated with shorter commutes, giving support to the theoretical background.

KEYWORDS:

• Self-employment
• commuting
• shirking
• leisure

JEL CLASSIFICATION:

• J22
• J30

Acknowledgments

This paper has benefited from funding from the Government of Aragón (Project S32-17R, co-financed by FEDER 2014-2020). J. Velilla gratefully acknowledges funding from the Government of Aragón Doctoral Grants (Program FSE Aragón 2014-2020).

Disclosure statement

No potential conflicts have been declared by the authors.

Notes

¹ The relationship between self-employment and commuting has rarely been studied (Van Ommeren and Van Der Straaten 2008; Gimenez-Nadal, Molina, and Velilla 2018b).

² Given that commutes are likely endogenous, we have repeated the analysis instrumenting commuting time using the commuting model shown in the Appendix. Results are robust to the general case.

Additional information

Funding

This work was supported by the Government of Aragón [Project S32-17R, co-financed by FEDER 2014-2020]; Government of Aragón Doctoral Grants [Program FSE Aragón 2014-2020].