Income loss among the self-employed: Implications for individual wellbeing and pandemic policy measures

Stefan Schneck

No 03/21, Working Papers from Institut für Mittelstandsforschung (IfM) Bonn

Abstract: Due to the pandemic-induced economic crisis, self-employed individuals are currently suering considerable income losses. The self-employed and the members in their households usually form an economic unit. As a consequence, the income cuts not only aect the self-employed themselves but also the rest of their household. We used the German Socio-Economic Panel (SOEP) to calculate how much income the selfemployed are able to sacrice to achieve a subjective barely sucient household income, which we interpret as the minimum level to maintain the standard of living. Our results suggest that full-time self-employed are typically the bread-earners in their households and that, as a consequence, even moderate income losses of the self-employed often lead to problems in maintaining the living standards of their households. Conditional on individual and household characteristics, the self-employed with employees are found to live in households that are less resilient to income losses. Furthermore, a negative correlation between falling short of the barely adequate household income and wellbeing was discovered. Self-employed in households with less than adequate incomes also reported higher concerns about social cohesion. These results have implications for policy - especially in light of the economic crisis induced by the pandemic.

Keywords: entrepreneurial households; income; income cuts; self-employment (search for similar items in EconPapers)
JEL-codes: L26 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ent, nep-eur, nep-iue and nep-lma
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifmwps:0321

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