In the context of recent growth in UK self-employment, the relationship between self-employment choices and local economic and labour market conditions is investigated to address whether self-employment is associated with local “push” or “pull”. Empirical analysis is conducted using UK longitudinal data linked to local area unemployment and earnings data. Analysis shows that pull factors are more significant in driving transitions into self-employment. Self-employed business ownership appears not to function as a significant alternative to unemployment where paid employment demand is weak. Entrepreneurial activity prospers where local wages are higher and unemployment lower.
|IZA Institute for Labor, Bonn discussion paper series