Moving In and Out of Self-Employment


The past 20 years have seen an unprecedented growth in levels of self-employment in the UK. Some commentators see this as a positive trend: a response to a vibrant and dynamic economy which demands increased labour market flexibility. Self-employment is viewed by them as a source of new jobs growth - particularly for those leaving unemployment, who find it difficult competing for new jobs offered by employers. More cautious observers, however, regard the trend as an indicator of growing labour market insecurity: a means by which employers can transfer the risks of employment onto workers. For them, rising self-employment is tied to the erosion of full-time permanent employment and growth in the secondary labour market.

To date, there has been little empirical research to inform and fuel this debate. Previous studies have focused only on aggregate rates of self-employment, and not on the movements in and out of it which underlie the rates of change. By looking in detail at these movements, putting them in context and assessing their implications, this study fills a major gap in the literature on the subject.