Advertisement

Small Business Economics

, Volume 49, Issue 1, pp 233–249 | Cite as

Job dissatisfaction of the self-employed in Indonesia

  • Illoong Kwon
  • Kitae Sohn
Article

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.

Keywords

Self-employment Job satisfaction Social comparison Developing country Indonesia 

JEL classifications

I31 J28 L26 O53 

Notes

Acknowledgements

We are grateful to the two anonymous reviewers for their helpful comments and suggestions.

References

  1. 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.CrossRefGoogle Scholar
  2. Banerjee, A. V., & Duflo, E. (2011). Poor economics: a radical rethinking of the way to fight global poverty. New York: Public Affairs.Google Scholar
  3. 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.CrossRefGoogle Scholar
  4. 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.CrossRefGoogle Scholar
  5. 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.CrossRefGoogle Scholar
  6. Blanchflower, D. G., & Oswald, A. J. (1998). What makes an entrepreneur? Journal of Labor Economics, 16(1), 26–60. doi: 10.1086/209881.CrossRefGoogle Scholar
  7. 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.CrossRefGoogle Scholar
  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.CrossRefGoogle Scholar
  9. Borjas, G. J. (1986). The self-employment experience of immigrants. Journal of Human Resources, 21(4).Google Scholar
  10. 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.CrossRefGoogle Scholar
  11. 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.CrossRefGoogle Scholar
  12. Cassar, L. (2010). Quality of employment and job-satisfaction: evidence from Chile. Zurich: University of Zurich.Google Scholar
  13. 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.CrossRefGoogle Scholar
  14. 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.CrossRefGoogle Scholar
  15. 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.CrossRefGoogle Scholar
  16. 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.CrossRefGoogle Scholar
  17. 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.Google Scholar
  18. 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.CrossRefGoogle Scholar
  19. Grossmann, V. (2009). Entrepreneurial innovation and economic growth. Journal of Macroeconomics, 31(4), 602–613. doi: 10.1016/j.jmacro.2008.12.008.CrossRefGoogle Scholar
  20. 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.Google Scholar
  21. 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.Google Scholar
  22. 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.CrossRefGoogle Scholar
  23. 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.CrossRefGoogle Scholar
  24. Luttmer, E. F. P. (2005). Neighbors as negatives: relative earnings and well-being. Quarterly Journal of Economics, 120(3), 963–1002.Google Scholar
  25. Maloney, W. F. (2004). Informality revisited. World Development, 32(7), 1159–1178. doi: 10.1016/j.worlddev.2004.01.008.CrossRefGoogle Scholar
  26. Meng, R. (1990). The relationship between unions and job satisfaction. Applied Economics, 22(12), 1635–1648. doi: 10.1080/00036849000000070.CrossRefGoogle Scholar
  27. 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.CrossRefGoogle Scholar
  28. Parker, S. C. (2009). The economics of entrepreneurship. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  29. 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.CrossRefGoogle Scholar
  30. Sohn, K. (2013a). Sources of happiness in Indonesia. Singapore Economic Review, 58(2), 1350014. doi: 10.1142/s0217590813500148.CrossRefGoogle Scholar
  31. Sohn, K. (2013b). Monetary and nonmonetary returns to education in Indonesia. Developing Economies, 51(1), 34–59. doi: 10.1111/deve.12001.
  32. 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.CrossRefGoogle Scholar
  33. 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.CrossRefGoogle Scholar
  34. Sohn, K. (2015b). The height premium in Indonesia. Economics & Human Biology, 16, 1–15. doi: 10.1016/j.ehb.2013.12.011.CrossRefGoogle Scholar
  35. 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.CrossRefGoogle Scholar
  36. 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.CrossRefGoogle Scholar
  37. 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.CrossRefGoogle Scholar
  38. Sohn, K. (2016d). The fatter are happier in Indonesia. Quality of Life Research. doi: 10.1007/s11136-016-1403-6.
  39. Sohn, K. (2016e). Risk incomprehension and its economic consequences. Journal of Development Studies. doi: 10.1080/00220388.2016.1166208.
  40. Sohn, K. (2016f). The risk preferences of entrepreneurs in Indonesia. Bulletin of Economic Research. doi: 10.1111/boer.12088.
  41. Sohn, K., & Kwon, I. (in press). Does trust promote entrepreneurship in a developing country. Singapore Economic Review. doi: 10.1142/S0217590816500144.
  42. 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.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Graduate School of Public AdministrationSeoul National UniversitySeoulSouth Korea
  2. 2.School of Economics and FinanceCurtin UniversityPerthAustralia
  3. 3.Department of EconomicsKonkuk UniversitySeoulSouth Korea

Personalised recommendations