1. Self-employed without personnel: between freedom and insecurity Project results Wieteke Conen Utrecht University School of Economics Final Conference, Utrecht, 1 July 2016

2. Project results: bundled in WSI Study Literature review/ LFS statistics -Developments over time Panel data -Labour market transitions -Impact of earlier life experiences -Consequences Survey data/ qualitative research -Motives -Work-life balance -Pay-off -Social security and pensions -Role of governments and interest organisations  Final version will appear soon

3. Background and aim Recent decades show an increase in the number and share of solo self-employed in many European countries Traditionally, self-employed considered ‘insiders’ fitting the category of independent entrepreneurs, but increasingly associated with ‘involuntary’, ‘dependent’ and ‘precarious’ self-employment (Schulze Buschoff and Schmidt, 2009; Westerveld, 2012) Limited quantitative empirical knowledge about how this group is faring, but many governments advocate further self-employment growth (European Commission, 2010) Examine and explain precariousness and self-sufficiency among solo self-employed.

4. Research question For whom does self-employment result into a precarious financial situation as opposed to who is rather well-off? 1.Identify who is to be classified as ‘precariously’ self- employed and who is rather ‘self-sufficient’; 2.What are the determinants? Contribution Self-employed regularly left out of empirical analyses; New light on relationship between self-employment and pay-off with specifically designed survey data

5. Concept of ‘precariousness’ vs ‘self-sufficiency’ Point of departure: ‘good jobs/ bad jobs’ (Kalleberg et al. 2000) ‘Bad jobs’ are “those with low pay and without access to health insurance and pension benefits” ( pp. 256 ) Broadened and adjusted this concept to situation of solo self-employed ‘Low pay’ (occupational level)  ‘low financial resilience’ (household level) Income notoriously hard to measure; Substantial share not or not completely dependent on this income Adjusted social security provisions Welfare states in Europe differ from situation in US Disability insurance does play substantial role

6. Step 1: Identify Used our own survey data: N=1,550 (Germany: N=757; Netherlands: N=793) Financial resilience Gross annual household income Financial means to bridge a period without work Financial situation of household Social security Disability insurance Supplementary pension Income after retirement Hierarchical cluster analysis (Ward’s method/ squared Euclidean distance) produced three clusters

7. Cluster descriptives Cluster 1 Precarious Cluster 2 Get by Cluster 3 Self-sufficient Financial resilience Gross annual household incomeFar below standard Almost standard Towards 2x standard Financial means to bridge a periodLess than a month About 3 months About half a year Financial situation of householdDeficitGet bySurplus Social security provisions Disability insurance11%21%34% Supplementary pension29%57%83% Income after retirementDisagreeNeither agree, nor disagree Agree %12,6%43,7%43,8%

8. Cluster analysis

9. Step 2: Determinants To what extent do different factors contribute to ‘precariousness’ or ‘self-sufficiency’? Supply side Motives to become solo self-employed Know-how Individual characteristics Demand side Timing Clientele Industries characteristics Institutional context  Multinomial logistic regression analysis

10. Conclusion Classified solo self-employed into o ‘precariously solo self-employed’ (12,6%), o solo self-employed who ‘get by’ (43,7%) o and ‘self-sufficient’ solo self-employed (43,8%); Especially solo self-employed who start from ‘push’ motives are less likely to be self-sufficient; Perceived financial knowledge positively affects the probability of being self-sufficient; No difference between solo self-employed starting their business before, during or after the financial crisis; ‘Destructive competition’ may play a role; Institutional context matters.

11. Discussion Comparison between for instance self-employed with and without personnel or with those in standard and non- standard employment relations; Low share insured against disability - even among self- sufficient; Future research: Mechanisms behind ‘push’ and destructive competition. Where do ‘push’ motives come from? Employers and industries, but also institutional changes? Destructive competition: does demand or supply side deserve attention?

12. Thank you for your attention