Question

Article on factors determining self employment in india

Answer 1

This article notes that recent self-employment growth in advanced economies has often been accompanied by changes in the composition and dynamics of self-employment. In particular, more people and different types of people’ are now experiencing self-employment during their working lives. The article goes on to examine, using UK data, the implications of growing self-employment for income potential. Several types of analysis are undertaken. Initially, short-term panel data are used to model the determinants of transitions into and out of self-employment. The rest of the article then focuses on the implications of such transitions for incomes in the short, medium, and long terms. Cross-sectional data reveal the high level of dispersion of self-employed incomes, and suggest that self-employment increases the likelihood that an individual will have a very low income. We then look at the effect of previous self-employment spells on current incomes, showing that those who leave self-employment for wage employment do not appear to have a higher risk of low incomes. Finally, we look at older people, close to and beyond retirement age, and find that those with work histories including self-employment have a higher chance of low incomes in later life, with low levels of savings and low pension entitlements. The findings contradict popular stereotypes of high income self-employed people, raising policy questions regarding the extent to which social security and pension systems are well designedfor a labor market with a growing and heterogeneous group of self-employed people.