An econometric analysis of the factors determining the self-employment rate in the European Union

Abstract

On average, the self-employment rate throughout the EU-28 has remained constant over the past few years. However, one could note that there were several cross-country differences in how the self-employment has evolved. In fact, research shows that countries such as Portugal and Croatia have seen a considerable decline in their self-employment rates, whilst countries such as the Netherlands and Slovenia have seen considerable increases in their self-employment rates. The purpose of this study was to find the factors that can lead to such cross-country variations in the self-employment rate by analysing the average impact of determinants such as the unemployment rate and the female participation rate. Results have shown that average age, the female participation rate and the unemployment all had a statistically significant throughout the EU-28. Whilst the self-employment rate was not that sensitive to these explanatory variables, reasons put forward in the main text help to explain the low degree of sensitivity.