Martin T. Robson

Explaining International Variations in Self-Employment: Evidence from a Panel of OECD Countries

Organisation for Economic Cooperation and Development (OECD) data from 1972 to 1996 reveals substantial differences in the levels and trends of self-employment rates across countries. This article uses recently developed panel integration and cointegration techniques to explore the determinants of aggregate self-employment rates. We find that within the panel, self-employment rates are positively and significantly related to personal income tax rates and negatively and significantly related to the unemployment benefit replacement rate. This accords a central role to government tax and transfer policies, in contrast to nonrobust influences from macroeconomic variables, which have been widely used in previous studies.

Marginal and Average Tax Rates and the Incentive for Self-Employment

The paper examines how the incentives for individuals to take up self-employment, rather than paid employment, are influenced by the marginal and average income tax rate. A model is developed in which an individual optimally chooses the supply of labor effort and the amount of tax to evade. Assuming that remuneration is more responsive to effort but that the opportunities for evasion are greater in self-employment, we find a negative relationship between self-employment and the marginal tax rate but a positive relationship with the average rate. This is supported by empirical evidence for 15 OECD countries over the 1980s.

Structural change, specialization and regional labour market performance: evidence for the UK

While structural change and regional differences in the pattern of employment specialization are widely perceived to be significant factors in accounting for disparities in the labour market performance of regions in the United Kingdom, there have been relatively few recent attempts to gather detailed evidence on this issue. The current study aims to fill this gap by examining the effects of structural change and associated changes in the pattern of employment specialization on three key indicators of regional labour market performance: the rate of employment growth, the unemployment rate and the rate of nonemployment. The findings indicate that while industry structure has statistically significant effects on regional labour market performance, the quantitative significance of these effects is relatively small.

Does Stricter Employment Protection Legislation Promote Self-employment?

Using recently developed indicators of the strictness of employment protection legislation in OECD countries, the paper examines the issue of whether strict employment protection legislation may promote self-employment by encouraging employers to contract-out work to self-employed workers. Contrary to the results of previous studies, the paper finds little evidence for a positive relationship between self-employment and the strictness of EPL. While the raw data suggest that a positive relationship may indeed exist, once suitable control variables are introduced into the analysis, it appears that if anything, the opposite may be true: i.e. stricter employment protection legislation may actually reduce self-employment.

Regional Variations in the Competitiveness of Unemployed Job-Seekers and the Rate of Outflows from Unemployment

The paper examines the role of variations in the competitiveness of unemployed jobseekers in leading to regional variations in the rate of outflows from unemployment, and attempts to identify the factors responsible for regional variations in the share of new hires captured by the unemployed. The papers empirical analysis suggests that the duration structure of unemployment, measured by the rate of inflows into unemployment relative to the beginning of period stock, is the primary determinant of the competitiveness of a regions unemployed job-seekers. Copyright 2001 by Blackwell Publishing Ltd

The Relative Earnings from Self and Paid Employment: A Time-series Analysis for the UK

The author investigates the determinants of variations in the reported relative earnings of self-employed and paid-employed workers in the United Kingdom, focusing in particular on the significant decline which has taken place since 1980. He finds that the main factors behind this decline have been the rise in the rate of self-employment itself and a reduction in the level of capital per self-employed worker; effects which he associates with a decline in the quality of the average self-employed business. Changes in the tax rates on income and in the sectoral composition of GDP helped to reduce the scale of the decline in self-employment relative earnings to some degree. Copyright 1997 by Scottish Economic Society.

Trade Unions, Wage Bargaining Coordination, and Foreign Direct Investment

Conventional wisdom is that a high trade union bargaining strength and a system of coordinated wage bargaining reduce the attractiveness of an economy as a location for foreign direct investment, although there is limited evidence for this. The paper takes panel data for 19 OECD economies to examine the relationship between trade union bargaining strength, bargaining coordi nation, and a range of incentives for inward foreign direct investment. It finds a strong negative effect of trade union density on inward foreign direct investment, which is dependent on the degree of wage bargaining coordination. A high degree of coordination weakens the deterrent effect of high union density, which is consistent with the notion that under certain circumstances a coordinated increase in wages can increase profits of the multinationals by hurting domestic firms.

Housing Markets And Regional Unemployment Flows In Great Britain

Over the past 20 years, there has been a great deal of interest from academic economists and policymakers in the UK in the contribution of the housing market to regional disparities in unemployment. However, despite a considerable body of research, there remains a great deal of uncertainty concerning the role played by different features of the housing market in shaping the regional pattern of unemployment. In this study, we aim to gain a deeper understanding of this issue by examining the relationship between housing market variables and the flows into and out of regional unemployment. Our findings indicate that both the level of regional house prices and the housing tenure mix have significant effects on the rate of flows into and out of regional unemployment and hence upon the equilibrium rate of unemployment in a region. In particular, we find that regions with a relatively high level of house prices and/or a low proportion of social rented housing will tend to have a relatively low equilibrium rate of unemployment, other things equal.

Does Labour Market Flexibility Matter for Investment? A study of Manufacturing in the OECD

This study examines whether a more flexible labour market – defined here in terms of the strictness of labour regulations regarding the flexibility of employers to adjust levels of employment in response to changing economic conditions – helps to promote a higher level of fixed capital formation in an economy. Theory generates ambiguous predictions concerning the sign of the relationship between investment and the labour market regulation regarding hiring and firing workers, although a positive relationship may be expected. Using an index of labour market regulation compiled from surveys of business executives in 19 Organization for Economic Co-operation and Development (OECD) economies, an econometric analysis is carried out to examine the effects of labour market flexibility on the level of investment in the manufacturing sector. The findings support the proposition that freeing-up regulatory constraints on employers’ use of labour helps to create a more favourable environment for investment.

The Determinants of New Firm Formation in UK Construction: Evidence from Quarterly VAT Registrations

This paper examines the ways in which industry-specific and macro-economic factors combine to lead to variations over time in the rate of new firm formation in the UK construction industry. The paper corroborates findings from elsewhere which suggest that housing wealth may be an important source of collateral for individuals seeking to raise the finance necessary to start up in business. The analysis of industry-specific influences supports the hypothesis that formation activity in construction is responsive to variations in the relative returns to entrepreneurship