Self-employment and the business cycle: evidence from Poland

Two reasons for undertaking self-employment can be distinguished. The first treats self-employment as the only way of avoiding unemployment. According to this view self-employment is countercylical and acts as a buffer. The second reason emphasises the entrepreneurial, risk-taking nature of self-employment, which according to this view is procyclical and similar to wage employment. This article examines these views by looking at labour market flows obtained from the Polish LFS. As the self-employed account for about 20% of the working population in Poland knowledge about their behaviour over the business cycle is of particular importance. The results point to countercyclical behaviour of self-employed farmers and the entrepreneurial nature of own-account workers and entrepreneurs with employees.