Abstract
The paper used time-series data and examined the effect of economic and social variables on the male and female self-employment rates in Spain. We also employed cointegration analysis (with and without) structural breaks. We thus find strong evidence that long run relationships exist among the variables. More precisely, we find that the unemployment rates and the ratio of self-employment to employees’ earnings have a positive effect on self-employment, whereas, economic development and divorce rates have a negative effect. Importantly, we find that the economic variables have equal or stronger long run impact on females than males, with both groups reacting to changes in family circumstances. Finally, we show that the short run family circumstances are better predictors of self-employment choices rather than economic factors, with self-employment being a means of adjustment to new personal circumstances and economic needs.
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Notes
Such a result has been verified by researchers (Amato and Beattie 2011; Bumpass et al. 1991; Hansen 2005; Jalovaara 2003; Preston and McDonald 1979; Ross and Sawhill 1975) for both the US and European countries such as Finland and Norway. Amato et al. (2007) found that there were frequent thoughts of divorce associated with declining family incomes.
Based on our estimates during 2011–2014.
The data on divorce and self-employment to employee income ratio are not distinguished by gender, due to data limitations available to us.
For example, González-Val and Marcén (2012), examining 16 European countries, show that shocks such as divorce-law reforms may affect divorce rates permanently.
We found that total unemployment rate may have been integrated of order 2 suggesting that unemployment was highly persistent in Spain. However, the gender specific unemployment rates provided evidence that the series may have been integrated of order 1. For the purpose of this work, we continued our analysis treating UNEM(total)t as I(1).
The model allowed for potential endogeneity between the self-employment rate and unemployment (see discussion in Thurik et al. 2008) where increased self-employment rates may have reduced subsequent unemployment rates. Indeed, the unemployment rate variable was found to react to disequilibrium (with p-value < 0.01) suggesting that the assumption of weak exogeneity was valid or the other variables were treated as weakly exogenous. We also experimented by estimating a model that allowed for the divorce rate to be endogenous in the system since self-employment may have affected marital stability (Cameron et al. 1997). Our results remained generally robust to this specification.
The specification allows a linear time trend in the levels of the data.
In order to determine the order of the VAR we ran an unrestricted VAR of order 4 by separating the endogenous and exogenous variables and including an intercept. The log-likelihood ratio (LR) statistics test selected order p = 3 for the overall and gender specific self-employment models.
Following the suggestion by the referee, we have also estimated the model including the fertility variable in the specification. For example, self-employment can be viewed as a strategy to solve the conflict between work and family life for women. Hence, mothers may choose to be self-employed in order to have greater flexibility in working hours, allowing them to spend more time with their children (Beutell 2007; Bianchi 2000; Hyytinen and Ruskanen 2007). Our results showed no long run or short run effects of fertility rate on male self-employment. In contrast, for females we found that the fertility rate had a positive and statistically significant long run elasticity of 1.273 [x2(1) = 5.2766, p = .022]. However, the inclusion of this variable alters the relationship between the economic variables and self-employment, with the coefficient of GDP becoming statistically insignificant. We suspect that this is driven by a potentially strong relationship between fertility decision and growth prospects. Demographic data are better analyzed within panel data framework in which geographical variations and control for a wide range of other factors (for example, age of children, marital status, and presence of grandparents in the household) can be considered in the modelling specification. We therefore leave this important aspect for future research.
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Saridakis, G., Mohammed, AM., García-Iglesias, J.M. et al. Economy and Divorces: Their Impact Over Time on the Self-Employment Rates in Spain. J Fam Econ Iss 39, 422–435 (2018). https://doi.org/10.1007/s10834-018-9575-6
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DOI: https://doi.org/10.1007/s10834-018-9575-6