The Road Not Taken: The Transition from Unemployment to Self-Employment in Canada, 1961-1994

Abstract

Abstract. The steady decline in self-employment in Canada for much of this century appears to have been reversed in recent years. This pattern is repeated in a large number of western countries. Several explanations have been put forward to explain these revivals. Among the most intensively studied is an push hypothesis in which people move into self-employment as a response to unemployment. Although arguments about the meaning of this hypothesis differ, the present study shows that there is no non-seasonal connection between unemployment and self-employment in Canada between 1961 and 1994. Directions for future research are discussed. Resume. Contrairement a la tendance a la baisse observee depuis le debut du siecle, le nombre de travailleurs autonomes au Canada a augmente au cours des dernieres annees. Ce revirement a aussi ete rapporte par plusieurs pays occidentaux. Il existe de nombreuses explications pour le regain du travail autonome. Parmi les hypotheses les plus etudiees, on retrouve l'hypothese de la poussee du suggerant que le chomage mene les gens au travail autonome. Bien qu'il existe plusieurs facons d'expliquer le travail autonome comme etant une reaction au chomage, cette etude demontre qu'il n'y a pas de lien non-saisonnier entre le chomage et le travail autonome au Canada entre 1961 et 1994. Une discussion des questions de recherche future conclura l'expose. Introduction Almost 150 years ago, Marx predicted the imminent disappearance of the bourgeoisie, the class of small-scale, independent business owners. For much of this century, within Marxism, and indeed among non-Marxists as well, this prediction posed no theoretical or empirical difficulties. Empirically, the decline of the petit bourgeois sector throughout the first 70 years of this century in most capitalist economies is unmistakable. Theoretically, this decline was evidence of the increasing concentration of capital in large firms. Indeed, there was no evidence, up until the 1970s at least, which might have suggested that the decline in self-employment might be ending. (2) Twenty years ago, Johnson (1972) examined Canadian trends in self-employment between 1932 and 1972, concluding that the sector had exhibited a steady decline in size throughout the period. Cuneo (1984) studied self-employment rates between 1931 and 1981, concluding that the petite bourgeoisie persisted between 1931 and 1951, but declined thereafter. Szymanski (1983) examined trends across several countries including Canada between 1960 and 1978, also concluding that the sector had declined. All of this evidence was consistent with Marxist and neo-Marxist theories about capital concentration and the rise of (Baran and Sweezy, 1966). The basic argument was that as monopoly capitalism stabilized, small firms disappeared and large monopolistic and oligopolistic firms took control not only of particular markets, but also of industries and even nation-states (Teeple, 1995). Cuneo (1984:298) may have put it most succinctly, stating that, [t]he petite bourgeoisie as a class is obviously being destroyed. However, during the 1980s, some research began to suggest that the self-employed sector was recovering some of its losses. Steinmetz and Wright (1989) summarize the overall trends in the size of the self-employed sector for ten different countries between 1970 and 1985. In the United States, and generally across western Europe, the rates are U-shaped, declining until the mid-1970s and then increasing again. Self-employment in Canada also appears to follow a U-shaped pattern. Cohen (1988) hints that the size of the self-employed sector grew in Canada between 1975 and 1986 and this is supported by OECD data (OECD, 1992) and by Crompton's (1993) documentation of a renaissance of the Canadian self-employed through 1991. Interestingly the revival, if it occurred in a country, happened during roughly the same period, the mid-1970s, in most western nations (Blau, 1987). …