Abstract
While some researchers have suggested that the self-employment (SE) sector is a haven during a financial crisis, others believe that SE is not necessarily the desired outcome, but an indicator that the labor market is tightening for some groups. Few researchers have compared the SE sector before and after the occurrence of a significant financial crisis, especially in developed countries. This paper analyzes the determinants of entry into self-employment during the 2008 Spanish Crisis. Using data from the Encuesta de Presupuesto Familiar (EPF), results show that although the rate of SE did not experience a significant change during this time, the crisis affected people differently based on gender, with females being more affected than males. Results also suggest differences between Comunidades Autonomas in how the self-employment sector behaved during the crisis.
Highlights
Economists widely acknowledge that during crises, people who are laid off from their wage jobs turn to self-employment (SE) activities
As mentioned in the empirical model section, this paper models the decision of a person to enter the labor market as a function of different personal and regional characteristics
This paper examines how the determinants of SE entry decisions were affected by the 2008 financial Crisis and labor reform in Spain using data from Encuesta de Presupuestos Familiares (EPF)
Summary
Economists widely acknowledge that during crises, people who are laid off from their wage jobs turn to self-employment (SE) activities. The literature on small business suggests that microenterprise owners and those who are self-employed are more flexible than their larger counterparts in terms of adjusting to changes in economic situations (Berry and Rodriguez 2001; Narjoko and Hill 2007). Alba-Ramirez (1994) found that for the case of Spain and the US, the duration of high unemployment periods significantly increases the probability of becoming self-employed. Despite these positive views of the benefits of SE during times of crisis, not all authors agree that SE is necessarily a good condition for workers. On the role of the self-employed as creators of additional job opportunities, Hughes (2003) found that the rise of female
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