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The Transition to Self-Employment and Perceived Skill-Mismatches: Panel Data Evidence from Eleven EU Countries

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Abstract

Some studies using either objective or subjective indicators, find that self-employed individuals are less likely to be or to report being skill-mismatched in comparison with salaried employees. The aim of this paper is to analyze the impact of the transition from salaried employment to self-employment on self-reported skill mismatches. To do so, this article uses eight waves of the European Community Household Panel covering the period 1994–2001. The panel data nature of this rich dataset, allows us to track individuals over time and measure self-reported skill-mismatches before and after the transition for the same individuals, using as the comparison group those individuals who remain in salaried employment during the whole sample period. Our empirical findings indicate that those individuals who transit from salaried employment to self-employment reduce their probability to report being skill-mismatched after the transition. Interestingly, we also observe that this effect vanish if the transition is done from an unemployment status, and that the effect is quite heterogenous across countries.

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Notes

  1. Conversely, some authors show that individuals do not decide to become self-employed if they have skill shortages (see Brixiova et al. (2009)).

  2. See Groot and Maassen van den Brink (2000) a complete meta-analysis and Munoz de Bustillo-Lorente (2018) for a survey.

  3. See Brunello and Wruuck (2019) for a recent survey.

  4. See Diaz-Serrano and Stoyanova (2010) for further discussion.

  5. EU-15 refers to the fifteen member states of the European Union before the 1 May 2004 enlargement.

  6. See Peracchi (2002) for a review of the organization of the survey.

  7. Individuals are forced to choose only one main occupation, either working for an employer in paid employment or working in self-employment. Hence, it is not possible to determine whether some individuals combine both self-employment and paid employment.

  8. We exclude workers in the public sector from the analysis because the determinants of occupational choice and job satisfaction among public sector workers deviate from those of private (salaried employment) sector workers (Francois 2000; Glazer 2004; Besley and Ghatak 2005; Prendergast 2007; Delfgaauw and Dur 2008, 2009; Millán et al. 2013).

  9. The estimated coefficients of the control variables included in the models shown in Table 4, which are not reported, provide the same qualitative results as the coefficients reported in Table 3 in terms of the direction and the size of the effect. Full estimates of the models in the table are available from the authors upon request.

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Funding

Luis Diaz-Serrano acknowledges the financial support from the Recercaixa research program, granted by the Obra Social "La Caixa” (Grant # 2014ACUP0130) and from the Spanish Ministry of Economy and Competitiveness (Grant # RTI2018-094733-B-I00).

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Authors and Affiliations

  1. ECO-SOS, Department D’Economia, Universitat Rovira I Virgili, Av. de la Universitat 1, 43204, Reus, Spain

    Judit Albiol-Sánchez, Luis Diaz-Serrano & Mercedes Teruel

  2. ECEMIN, Universidad Antonio Nebrija, C/ Sta. Cruz de Marcenado 27, 28015, Madrid, Spain

    Luis Diaz-Serrano

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  1. Judit Albiol-Sánchez
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Correspondence to Luis Diaz-Serrano.

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Albiol-Sánchez, J., Diaz-Serrano, L. & Teruel, M. The Transition to Self-Employment and Perceived Skill-Mismatches: Panel Data Evidence from Eleven EU Countries. Soc Indic Res 153, 957–977 (2021). https://doi.org/10.1007/s11205-020-02520-7

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