The Stability of Self-Employment

Abstract

The persistent role of self-employment in the Japanese and Korean economies and its changing character under recent economic and industrial changes merit renewed attention to self-employment in the two countries. Using individuals’ job history data, the article compares the occupational heterogeneity of self-employment activities and stability in Japan and Korea. Korea shows a much higher prevalence of shop/restaurant owners among total self-employment than Japan, where skilled blue-collar self-employed occupy a relatively large share. The hazard models of exit from self-employment show that the overall likelihood of leaving self-employment is greater among Korean self-employed than their Japanese counterparts. In Korea, shop/restaurant owners not only comprise the majority of self-employed persons but also show a fairly high risk of exit, similar to unskilled self-employed. This pattern is contrasted to shop/restaurant owners in Japan, who show considerable stability. The study addresses how differences in the stability of self-employment between Japan and Korea are linked to different features of broader work arrangements in the two countries.