Skip to content

Journal Article

Self-employment in an equilibrium model of the labor market

Authors

Publication date

Dec 2016

Summary

Self-employed workers account for between 8 and 30 % of participants in the labor markets of OECD countries (Blanchower, Self-employment: more may not be better, 2004). This paper develops and estimates a general equilibrium model of the labor market that accounts for this sizable proportion. The model incorporates self-employed workers, some of whom hire paid employees in the market. Employment rates and earnings distributions are determined endogenously and are estimated to match their empirical counterparts. The model is estimated using the British Household Panel Survey (BHPS). The model is able to estimate nonpecuniary amenities associated with employment in different labor market states, accounting for both different employment dynamics within state and the misreporting of earnings by self-employed workers. Structural parameter estimates are then used to assess the impact of an increase in the generosity of unemployment benefits on the aggregate employment rate. Findings suggest that modeling the self-employed, some of whom hire paid employees implies that small increases in unemployment benefits leads to an expansion in aggregate employment.

Published in

IZA Journal of Labor Economics

Volume

5

DOI

http://dx.doi.org/ 10.1186/s40172-016-0046-8

ISSN

16

Subjects

Labour Market and Labour Economics

Notes

Open Access article; © Bradley. 2016; This article is distributed under the terms of the Creative Commons Attribution 4.0 International License(http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.

#523743


Research home

Research home

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest