Promoting self-employment: Does it create more employment and business activity?

Abstract

We assess the economic impact of reforms promoting self-employment in the countries that have implemented such reforms since the early 2000s: the Netherlands, the United Kingdom, and France. To that end, we use a difference-in-differences approach on a cross-country–industry panel database. Our results suggest that the reforms have raised the number of self-employed workers, but mostly through a substitution effect between the self-employed and employees, and not through a supply effect or a substitution effect with informal activities. This means that these reforms could have failed to achieve their main objectives.