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Persistence in Self-Employment Rates before the Great Lockdown: The Case of the UK

Elisabeth Lopez-Perez (), Ana Rodriguez-Santiago () and Emilio Congregado ()
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Elisabeth Lopez-Perez: Department of Economics, International University of Andalusia, 21071 Huelva, Spain
Ana Rodriguez-Santiago: Department of Economics, University of Huelva and CCTH, E-21002 Huelva, Spain

Sustainability, 2020, vol. 12, issue 16, 1-13

Abstract: A growing body of empirical literature—both on the micro and macro scale—is devoted to exploring the existence of hysteresis—or at least persistence—in self-employment, i.e., whether policy, economic or external shocks have transitory or persistent effects on the probability of survival, and in turn, on the natural rate of self-employment. In aggregate time series studies, the usual method to address this issue has been to look for unit roots by using alternative tests or by using unobservable components models. In this research, we performed a battery of tests and competing approaches to check the robustness of our results with UK self-employment time series. The UK is a suitable case for study because the recent evolution of the UK self-employment rate figures shows a steady growth since the beginning of the millennium. This long-term rise in UK self-employment has attracted the attention of scholars, at least, before the Great Lockdown. We find evidence of hysteresis, while business cycle output variations significantly affect self-employment rates. The article discusses the implications of the findings.

Keywords: persistence; unobserved components model; time series models; business cycles; self-employment; entrepreneurship; UK (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2020
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