Does Solo Self-employment Serve as a 'Stepping Stone' to Employership?

Michael Leith Howling and Mark Wooden
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Michael Leith Howling: Melbourne Institute: Applied Economic & Social Research, The University of Melbourne

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: This paper examines the extent to which solo self-employment serves as a vehicle for job creation. Using panel data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, a dynamic multinomial logit model of transitions between labour market states is estimated. The empirical strategy closely follows that used in a previous study employing household data from Germany by Lechmann and Wunder (2017). Estimates of true cross-state dependence between solo self-employment and employership are obtained that are relatively small. Further, our results imply that the probability of a male remaining an employer just two years after transitioning out of solo self-employment is only 2% (and among women, it is virtually zero). The extent of both true cross-state dependence and true state dependence in employership is, however, much greater among individuals who have demonstrated a preference for self-employment in the past. This implies that pro-entrepreneurial policies that target more ‘entrepreneurial’ individuals will have more pronounced and long-term effects in stimulating job creation.

Keywords: Dynamic multinomial logit; HILDA Survey; Solo self-employment; State dependence; Stepping stones (search for similar items in EconPapers)
JEL-codes: L26 (search for similar items in EconPapers)
Pages: 33pp
Date: 2019-12
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https://melbourneinstitute.unimelb.edu.au/__data/a ... 249522/wp2019n19.pdf (application/pdf)

Related works:
Journal Article: Does solo self-employment serve as a ‘stepping stone’ to employership? (2021)
Working Paper: Does Solo Self-Employment Serve as a 'Stepping Stone' to Employership? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2019n19

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