A decomposition of the growth in self-employment

We decompose the rise of self-employment in the Netherlands in the period 1992-2006. Using Logit estimates we try to identify the most important determinants of this trend, separately for women and men. 

The observed upturn is remarkable, as it contrasts with the decline in earlier decennia. Contrasting some findings for the US, we find that the industrial composition only plays a small role in explaining the upturn. For women, we find that intra-sectoral developments have been important in spurring self-employment. In particular, it has become more common for women to be self-employed in the Trade and Culture sectors.

The ageing of society (older people are self-employed more often) is an important cause of the observed increase. This effect is partly compensated by the negative effect of a higher educated labour force.

This leaves, in the context of our model, most of the upturn to be related to year effects, which could be an indication of either generic policy effects or a socio-cultural trend. The latter is reflected in an improved reputation of self-employment. We postulate that generic policy effects have been the most important cause of the increase in self-employment. The largest effects were seen just in the last few years of our sample (2004-2006), which appears to be inconsistent with the notion of a longer lasting socio-cultural trend.