Business Start-Ups or Disguised Unemployment? Evidence on the Character of Self-Employment from Transition Economies

36 Pages Posted: 31 Oct 2000

See all articles by John S. Earle

John S. Earle

George Mason University - Schar School of Policy and Government; IZA Institute of Labor Economics

Zuzana Sakova

Newark College of Arts & Sciences - Department of Economics

Abstract

We study the character of self-employment, drawing upon household survey evidence from six transition economies. Multinomial-logit analysis distinguishing employers from own-account self-employed and comparing both groups to employees and unemployed finds that own-account status is intermediate in most characteristics; tests reject the pooling of any of these categories. Selection-bias-corrected earnings premia are large for employers and smaller for own-account. A structural polychotomous model shows that employers respond strongly to predicted earnings premia in all countries, while the own-account response is estimated to be negative, supporting the interpretation that individuals may be pushed into own-account status by lack of work opportunities.

Keywords: self-employment, entrepreneurship, transition, private employment, Eastern Europe

JEL Classification: J23, J31, J6, O17, O57, P5

Suggested Citation

Earle, John S. and Sakova, Zuzana, Business Start-Ups or Disguised Unemployment? Evidence on the Character of Self-Employment from Transition Economies. Available at SSRN: https://ssrn.com/abstract=248346 or http://dx.doi.org/10.2139/ssrn.248346

John S. Earle (Contact Author)

George Mason University - Schar School of Policy and Government ( email )

3351 Fairfax Drive
MS 3B1
Arlington, VA 22201
United States
703-993-8023 (Phone)

HOME PAGE: http://earle.gmu.edu

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Zuzana Sakova

Newark College of Arts & Sciences - Department of Economics ( email )

360 ML King Jr. Blvd.
Newark, NJ 07102
United States

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