Abstract
In developed countries, the self-employed have been found to be more satisfied with their jobs than paid employees. We found the exact opposite for a developing country after analyzing 8732 respondents in the Indonesian Family Life Survey. The job dissatisfaction of the self-employed was not fully explained by earnings, personal traits, job characteristics, anticipation, or adaptation, but mostly by segregation into a small number of industries with few job benefits. This finding is consistent with the dual labor market theory. We also found that among the self-employed, those with the highest probability of being paid employees were the least satisfied. Paid employment was highly sought after in developing countries, and these were presumably self-employed workers with high abilities. This finding cannot be explained by the dual labor market theory alone. To explain this inconsistency, we enriched this theory with relative deprivation. Our results suggest that the existence of the dual labor market and relative deprivation are important determinants of the job satisfaction of the self-employed in developing countries.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Acs, Z. J., Desai, S., & Hessels, J. (2008). Entrepreneurship, economic development and institutions. Small Business Economics, 31(3), 219–234. doi:10.1007/s11187-008-9135-9.
Banerjee, A. V., & Duflo, E. (2011). Poor economics: a radical rethinking of the way to fight global poverty. New York: Public Affairs.
Benz, M., & Frey, B. S. (2008). Being independent is a great thing: subjective evaluations of self-employment and hierarchy. Economica, 75(298), 362–383. doi:10.1111/j.1468-0335.2007.00594.x.
Binder, M., & Coad, A. (2013). Life satisfaction and self-employment: a matching approach. Small Business Economics, 40(4), 1009–1033. doi:10.1007/s11187-011-9413-9.
Blanchflower, D. G., & Oswald, A. J. (1992). Entrepreneurship, happiness and supernormal returns: evidence from Britain and the US. Cambridge, MA: National Bureau of Economic Research.
Blanchflower, D. G., & Oswald, A. J. (1998). What makes an entrepreneur? Journal of Labor Economics, 16(1), 26–60. doi:10.1086/209881.
Blanchflower, D. G., & Oswald, A. J. (2004). Well-being over time in Britain and the USA. Journal of Public Economics, 88(7–8), 1359–1386. doi:10.1016/s0047-2727(02)00168-8.
Block, J., & Koellinger, P. (2009). I can’t get no satisfaction—necessity entrepreneurship and procedural utility. Kyklos, 62(2), 191–209. doi:10.1111/j.1467-6435.2009.00431.x.
Borjas, G. J. (1986). The self-employment experience of immigrants. Journal of Human Resources, 21(4).
Card, D., Mas, A., Moretti, E., & Saez, E. (2012). Inequality at work: the effect of peer salaries on job satisfaction. American Economic Review, 102(6), 2981–3003. doi:10.1257/aer.102.6.2981.
Carree, M. A., & Verheul, I. (2012). What makes entrepreneurs happy? Determinants of satisfaction among founders. Journal of Happiness Studies, 13(2), 371–387. doi:10.1007/s10902-011-9269-3.
Cassar, L. (2010). Quality of employment and job-satisfaction: evidence from Chile. Zurich: University of Zurich.
Clark, A. E. (1997). Job satisfaction and gender: why are women so happy at work? Labour Economics, 4(4), 341–372. doi:10.1016/S0927-5371(97)00010-9.
Clark, A. E., Frijters, P., & Shields, M. A. (2008). Relative income, happiness, and utility: an explanation for the Easterlin paradox and other puzzles. Journal of Economic Literature, 46(1), 95–144. doi:10.1257/jel.46.1.95.
Clark, A. E., & Oswald, A. J. (1996). Satisfaction and comparison income. Journal of Public Economics, 61(3), 359–381. doi:10.1016/0047-2727(95)01564-7.
Clark, K., & Drinkwater, S. (2000). Pushed out or pulled in? Self-employment among ethnic minorities in England and Wales. Labour Economics, 7(5), 603–628. doi:10.1016/S0927-5371(00)00015-4.
Fields, G. S. (2009). Segmented labor market models in developing countries. In H. Kincaid & D. Ross (Eds.), The Oxford handbook of philosophy of economics (pp. 476–510). Oxford: Oxford University Press.
Gindling, T. H., & Newhouse, D. (2014). Self-employment in the developing world. World Development, 56, 313–331. doi:10.1016/j.worlddev.2013.03.003.
Grossmann, V. (2009). Entrepreneurial innovation and economic growth. Journal of Macroeconomics, 31(4), 602–613. doi:10.1016/j.jmacro.2008.12.008.
Hanglberger, D., & Merz, J. (2011). Are self-employed really happier than employees? An approach modelling adaptation and anticipation effects to self-employment and general job changes. Bonn IZA: IZA Discussion Paper.
Hundley, G. (2001). Why and when are the self-employed more satisfied with their work? Industrial Relations, 40(2), 293–316. doi:10.1111/0019-8676.00209.
Lange, T. (2012). Job satisfaction and self-employment: autonomy or personality? Small Business Economics, 38(2), 165–177. doi:10.1007/s11187-009-9249-8.
Lewis, W. A. (1954). Economic development with unlimited supplies of labour. Manchester School, 22(2), 139–191. doi:10.1111/j.1467-9957.1954.tb00021.x.
Luttmer, E. F. P. (2005). Neighbors as negatives: relative earnings and well-being. Quarterly Journal of Economics, 120(3), 963–1002.
Maloney, W. F. (2004). Informality revisited. World Development, 32(7), 1159–1178. doi:10.1016/j.worlddev.2004.01.008.
Meng, R. (1990). The relationship between unions and job satisfaction. Applied Economics, 22(12), 1635–1648. doi:10.1080/00036849000000070.
Millán, J. M., Hessels, J., Thurik, R., & Aguado, R. (2013). Determinants of job satisfaction: a European comparison of self-employed and paid employees. Small Business Economics, 40(3), 651–670. doi:10.1007/s11187-011-9380-1.
Parker, S. C. (2009). The economics of entrepreneurship. Cambridge: Cambridge University Press.
Rees, H., & Shah, A. (1986). An empirical analysis of self-employment in the UK. Journal of Applied Econometrics, 1(1), 95–108. doi:10.1002/jae.3950010107.
Sohn, K. (2013a). Sources of happiness in Indonesia. Singapore Economic Review, 58(2), 1350014. doi:10.1142/s0217590813500148.
Sohn, K. (2013b). Monetary and nonmonetary returns to education in Indonesia. Developing Economies, 51(1), 34–59. doi:10.1111/deve.12001.
Sohn, K. (2014). A note on the effects of education on youth smoking in a developing country. Journal of the Asia Pacific Economy, 19(1), 66–73. doi:10.1080/13547860.2013.803845.
Sohn, K. (2015a). Gender discrimination in earnings in Indonesia: a fuller picture. Bulletin of Indonesian Economic Studies, 51(1), 95–121. doi:10.1080/00074918.2015.1016569.
Sohn, K. (2015b). The height premium in Indonesia. Economics & Human Biology, 16, 1–15. doi:10.1016/j.ehb.2013.12.011.
Sohn, K. (2016a). Does a taller husband make his wife happier? Personality and Individual Differences, 91, 14–21. doi:10.1016/j.paid.2015.11.039.
Sohn, K. (2016b). Height and happiness in a developing country. Journal of Happiness Studies, 17(1), 1–23. doi:10.1007/s10902-014-9566-8.
Sohn, K. (2016c). The role of spousal income in the wife’s happiness. Social Indicators Research, 126(3), 1007–1024. doi:10.1007/s11205-015-0934-5.
Sohn, K. (2016d). The fatter are happier in Indonesia. Quality of Life Research. doi:10.1007/s11136-016-1403-6.
Sohn, K. (2016e). Risk incomprehension and its economic consequences. Journal of Development Studies. doi:10.1080/00220388.2016.1166208.
Sohn, K. (2016f). The risk preferences of entrepreneurs in Indonesia. Bulletin of Economic Research. doi:10.1111/boer.12088.
Sohn, K., & Kwon, I. (in press). Does trust promote entrepreneurship in a developing country. Singapore Economic Review. doi:10.1142/S0217590816500144.
Yousef, D. A. (2001). Islamic work ethic—a moderator between organizational commitment and job satisfaction in a cross-cultural context. Personnel Review, 30(2), 152–169. doi:10.1108/00483480110380325.
Acknowledgements
We are grateful to the two anonymous reviewers for their helpful comments and suggestions.
Author information
Authors and Affiliations
Corresponding author
Appendix
Appendix
Flow chart for set 1 with equal chance for each second option
Flow chart for set 2 with equal chance for each second option
Rights and permissions
About this article
Cite this article
Kwon, I., Sohn, K. Job dissatisfaction of the self-employed in Indonesia. Small Bus Econ 49, 233–249 (2017). https://doi.org/10.1007/s11187-016-9820-z
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11187-016-9820-z