Empirical Studies of Self‐Employment

This paper presents a review of empirical studies of self‐employment for the Australian, Canadian, Dutch, UK and US labour markets. Both cross‐sectional and longitudinal studies are analysed. Analyses using cross‐sectional data examine the propensity to be self‐employed at any one point in time, whereas longitudinal studies focus on the transition into self‐employment from wage/salary employment and the survival rate in this state over time. Various hypotheses advanced in the economics and sociology literatures on self‐employment are tested. These include the relationship between managerial ability and the propensity to be self‐employed and the impact of financial constraints on entry into self‐employment stressed in economic models of entrepreneurship, and the relationships between self‐employment choice and the nature of the work and group characteristics (e.g., ethnic enclaves) stressed in sociological models of entrepreneurship. The evidence shows that self‐employment outcomes are significantly affected by factors such as individual abilities, family background, occupational status, liquidity constraints and ethnic enclaves.