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Self-employment status: the role of state dependence and initial circumstances

Henley, Andrew 2004. Self-employment status: the role of state dependence and initial circumstances. Small Business Economics 22 (1) , pp. 67-82. 10.1023/B:SBEJ.0000011573.84746.04

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Abstract

This paper uses British longitudinal data to model self-employment status. In contrast to previous studies, the modelling approach accounts for state-dependence and unexplained heterogeneity effects. The paper concludes that state dependence is an important influence on self-employment choice. Someone self-employed last year is, controlling for observable and unobservable influences, 30 percentage points more likely to be self-employed this year than someone who was in paid employment a year ago. We also find significant individual heterogeneity in the probability of self-employment, with significant explained influences operating through gender, educational attainment, occupation, spouse's self-employment, and parental and educational background. Significant, though quantitatively smaller influences come though initial financial circumstance and current house price movements. Local labour market shocks do not appear significantly to influence self-employment choice. This we conclude that the autoregressive nature of self-employment time-series would appear to be a structural rather than a cyclical phenomenon.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Publisher: Springer
ISSN: 0921-898X
Date of First Compliant Deposit: 4 August 2016
Last Modified: 04 Jun 2017 09:20
URI: http://orca.cf.ac.uk/id/eprint/93613

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