The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted Monica Consalvi and Mirella Morrone Istat, Division for Statistical registers, Administrative data and statistics on Public Administration 22nd Group Wiesbaden Group on Business Registers International Roundtables on business Survey Frames Session 4: Co-operation with Administrative Sources 27-30 September 2010 • Statistics Estonia, Tallinn

The availability of new admin sources How? 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames The revision of the assessment methodology of self-employment for two reasons: The Re-engineering process that involved the whole system of Business Registers The availability of new admin sources How? Through the evaluation of definitional issues and methodology adopted Results: The estimated amount may considerably vary depending upon the used definitions and the chosen methodology The estimate of self-employment could be useful for Entrepreneurship Indicators Programme

27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted The assessment of employment is not a problematic issue for sole proprietorships because they must hold the owner who participates directly in the management and organization of the enterprise. In the following analysis, the attention focuses totally on the companies (1,617,383) as registered in the BR 2007. The table shows the active companies in the 2007 Italian BR by legal form and their self-employment as estimated using existing procedures. 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames Enterprises and relative self-employment by legal form – Year 2007

27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted The definition of “self-employed” adopted in the BR and in all economic surveys is based on a “functional approach” for which: for all enterprises, there is a physical entity called “self-employed” who performs a management and/or coordination activity, then the organization of the activity identifies the enterprises BUT: among the Divisions of the Institute there are some differences about the categories that can be included in the definition of “self-employed”: some categories are included in one survey and at the same time excluded in another ones. 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames With reference to the Italian Legal Context, the Italian CIVIL CODE differentiates between employees and self-employed persons. Self-employed person is the one who is running a business and carries on a work or service working mainly for one's self and without any subordination to the customer. Self-employment differs from employees, as stated in the Art. 2094, because of the lack of subordination to the entrepreneur, who only defines the general characteristics of the work.

About Istat definitions: 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames About Istat definitions: there is no consistency: SBS surveys, specify that the relatives (family members) “must” carry out “a manual labour”. there is a critical aspect: In particular in SBS it is unclear whether and to what extent the companies, classified as corporations, have self-employed workers.

The administrative sources used in BR to estimate self-employed: 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted The administrative sources used in BR to estimate self-employed: 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames The register of craftsmen and traders (hereinafter called RCT) The persons with positions in the enterprise (hereinafter called PPE) They are considered as “primary sources”: (if the unit is not present in one of the two primary sources, their self-employed will be imputed) The statistics-based tax assessment (hereinafter called: STA) The 770-form tax register -770 simplified (hereinafter called 770) The territorial total amount section (hereinafter called TTA)

Two Sources used so far: 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted Two Sources used so far: THE REGISTER OF CRAFTSMEN AND TRADERS (hereinafter called: RCT) It is a special section of the Social Security Archive. It registers health benefits and social security of the craftsmen and traders, therefore it contains information about the holders of a craft and/or a commercial enterprise. This archive represents the primary source for updating the employment in the BR since it allows the correct identification of the number of self-employed workers. As a consequence hereinafter it will be used as the benchmark to understand how to figure out the new administrative sources and for estimating the self-employed of all the other companies outside the benchmark. 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

THE PERSONS WITH POSITIONS IN THE ENTERPRISE (hereinafter called: PPE) 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted THE PERSONS WITH POSITIONS IN THE ENTERPRISE (hereinafter called: PPE) It is a special section of the Register of Enterprises, administered by the Chambers of Commerce. It contains: Personal data of the persons with positions (gender, date of birth, place of residence); Type of position (unlimited partner, limited partner, administrator, etc.); The date of commencement and completion of position; The personal data of the enterprise in which the persons hold he positions. This archive will be reviewed in the new procedure. If no valid admin information: Allocation methods (imputation of the average number of self-employed by legal form and two-digit economic activity code) To put the number ‘equal to one’, or equal to the previous year’s value. 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

The new available information: 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted The new available information: The Statistics-based Tax Assessment (hereinafter called STA), in Italian “Studi di Settore” It is a fiscal survey carried out by the Tax Authority to evaluate the capacity of the enterprises to produce income and to know whether they pay tax correctly. Small-medium enterprises (turnover <7.5 million euros) The Employment Section A has been analysed, limited to the division regarding persons who declare business income (they have a business activity). Here it is possible to find information about the diverse professional categories that exist in each enterprises, together with the frequency of the persons employed, hence the procedure has to choose which are typical for independent workers. The only source that contains data at enterprise level 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

The 770-form tax register-770 simplified (hereinafter called as 770) 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted The 770-form tax register-770 simplified (hereinafter called as 770) It is a declaration of tax deducted at source, is administered by the Ministry of Economy and Finance. It contains: Income from employment and likewise; Retirement allowance; Capital provisions for pension funds; Income from self employment; Commissions and other income; Information relating to the social security contributions; Information relating to the withholdings for the previous assessment period; Personal data of the self-employed; Id variables of enterprise. 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

The territorial total amount section (hereinafter called TTA) 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted The territorial total amount section (hereinafter called TTA) It is part of the Social Security Register administered by the Italian National Institute of Social Security (INPS). It is an yearly supply of data, proving for each worker information concerning: Professional qualification; Months worked; Insurance referred to a disability/old/age/survivors pension; Income support for unemployment benefits. It is a register of EMPLOYEES. 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

The process of admin data integration and allocation of self-employed 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted The process of admin data integration and allocation of self-employed The procedure consists in one assessment following the other, in successive subsets of the initial 1,617,383 companies, formed from a different integration of available sources. Formulation of the basic hypothesis concerning the HIGH QUALITY of the source RCT to identify the number of self-employed. It will be used as “benchmark” 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

The phases of the process 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted The phases of the process The first step is to use the PPE and the new STA in an optimal way through: Logical analysis consists to choice the type of positions in the source PPE and the professional categories in the new STA that will be considered as “characteristic” of independent work 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames From about 300 to 57 initial positions From about 15 to 7 professional categories Empirical observation of the frequency distribution of administrative positions in the source PPE and the professional categories in the new STA

To synthesize the empirical observation: 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted To synthesize the empirical observation: 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

3,574 “real zeros” 10,634 “real zeros” The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted Enterprises, positions in PPE, provisional estimates by linkage subsets – Year 2007 3,574 “real zeros” 10,634 “real zeros”

The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted Di=|xi-yi| / |xi+yi| Enterprises, self-employed in STA and provisional estimates by linkage subsets – Year 2007

CONCLUSION 1 - The “real zeros” 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted CONCLUSION 1 - The “real zeros” Link with the 770-form Tax Register: 15% are assistants; 85% are employees Corporations and cooperatives with non-zero turnover and employing workers 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames

New estimated self-employed 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted CONCLUSION 2 Enterprises with imputed values of self-employed: 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames 50.3% 28.1% CONCLUSION 3 -5.5% New estimated self-employed of which: Partnerships Other legal forms

THANK YOU FOR YOUR ATTENTION! 27-30 September 2010 • Statistics Estonia, Tallin The assessment of self-employment in the BR using multiple administrative sources: a close examination about definitional issues and methodology adopted THANK YOU FOR YOUR ATTENTION! 22nd Meeting of the Wiesbaden Group on Business Registers International Roundtable on Business Survey Frames