Hakim 1991.
In all EC countries'^, with the sole exception of Portugal, women form a clear minority of
the self-employed. In most of the countries women account for between 18 and 28 per cent of all self-employment As Figure 3.1 shows, this pattern is fairly consistent across the EC;only in Denmark (13 - 15 per cent) and Ireland (10 - 11 per cent), does the female share of self-employment fall below this range, whilst Portugese women are distinguished by their much larger than average share (42 per cent) of total employment.
Another uniform feature, clear from Figure 3.1 (in those countries for which data are available across the period) is that with the exception of Belgium, where it was static, the share of women in total self-employment grew slightly during the 1983-89 period."
FOxiales as % of total Female share In total employment
so
40
30
20
10
B D DK
SoiQcKBuopaa Ldngi Bans SonBjn NMk EUB9 ododa LAP
si:??
ISO •
GR I IRL NL UK BUR9
Figure 3.2
In the light of these observations that women constitute a small, but growing part of EC employment, obvious questions are: firstly whether women are under-represented in self-employment simply because they are under-represented in self-employment as a whole; and secondly whether any growth in female self-employment simply reflects the overall growth
12
13
Luxembourg is exiuded from this analysis, and most of that which follows, for reasons explained in the Preface above.
In the Netherlands, the growth was more marked than in the other counhies, but this change is likely at least in part to have resulted from a major revi.sion to the Dutch survey method in 1987, resulting in a significant increase in the number of (largely women) part-time workers (Including self-employed), who were picked up by the survey (see EUROSTAT 1989).
in female employment and female economic activity rates which have occurred in all EC countries in recent years. Figure 3.2 shows that the representation of women in total employment is in fact much higher than their representation in self-employment (again with the exception of Portugal), so that womenare indeed even more under-represented among the self-employed than in other areas of work.
Table 3.1 summarises this information on self-employment and overall employment, and
shows the self-employment rates of men and women in the different E<j countries
(comparative data from 1975 are also shown, for those countries which were EC members in 1975). It conflrms that across the community as a whole, women workers have a much lower propensity than male workers (slightly less than half as much, taking the "EUR9""
countries), and that this overall pattern has changed little over the 1983-88 period.
Table 3.1: Self-employment rates by gender (1975,1983 and 1989)
1975 1983 1989
Source: own calculations from ELFS
Once again, however, the table shows considerable variation between individual countries.
Thus, taking the data for the most recent year (1989), the female self-employment rate is only a fifth of the male rate at one extreme (in Denmark), whilst it is actually slightly greater than the male rate at the other extreme (Portugal).
Over time, the general pattem appears to be one in which women's propensity to be
self-" i.e. excluding Luxembourg, Portugal and Spain.
employed has grown rather faster than men's, but again there are several exceptions to this pattern, and of the 8 countries for which data are available for all three years (1985,1983 and 1989), only in three of them (Denmark, Germany, and the Netherlands") does there appear to be a consistently faster increase in the female self-employment rate relative to the male over all three years. Indeed in two of the countries (Belgium and Ireland) the female self-employment rate has consistently fallen relative to the male over the period. In the UK, which recorded a very strong growth in the female self-employment rate during the 1970s and early 1980s (considerably faster than the already relatively fast growth in male self-employment), this picture has changed somewhat in themost recent period, with thefemale self-employment rate continuing to grow strongly, but slightly less fast than the male rate.
In so far as generalisations can be made from this diverse picture, then, the key points would
seem to be:
• firstly that female rates of self-employment are generally much lower than male rates;
• secondly that both male and female self-employment have grown, but in so far as female self-employmenthas grown faster than male, this has been largely in line with the general growth in female employment - there is no general or uniform tendency across the EC for female self-employment rates to grow faster than male rates in recent years, as appears to be the case in some other developed countries (see the data for the US presented in Aronson 1991), and as some earlier authors (including the present one) have claimed in studies of individual EC countries. Thus the patterns observed for the UK and Germany (see Meager, Kaiser and Dietrich 1992) would seem to be atypical - Germany is one of the few countries where the female self-employment rate has grown faster than the male between 1975 and 1989, and the apparently similar pattern in the UK, seems following the availability of more recent data, to have reversed during the late 1980s (that is, an increase in female self-employment inflows in the early eighties, was followed after a lag, by an increase in female outflows).
It is likely that an adequate explanation of self-employment patterns by gender cannot be constructed without consideration of occupational and sectoral trends, since the distribution of the self-employed between different types of job varies considerably between the sexes.
Thus, for example, one explanation suggested for the change in the gender pattern of self-employment growth in the mid-1980s in the UK {Johnson 1991) is that self-self-employment in the construction sector (a heavily male-dominated industry) grew particularly strongly in the UK during the second half of the 1980s.
It is unfortunate that, as noted above, the ELFS data do not permit an analysis by occupation and qualification level, since there is evidence from some individual country studies (such as the UK and Germany - see Meager, Kaiser and Dietrich 1992) - of strong growth of female self-employment among more highly skilled (managerial and professional occupations). One hypothesis advanced for this is that female penetration of these occupations has grown generally in recent decades, and that women's expectations of progression in careers have also
" Our earlier caveats about the Dutch data should, however, be recalled.
been raised. In practice, however, (see the case study evidence from several countries presented in OECD 1990), such expectations are often frustrated, and this may lead such women to seek this desired career development through self-employment, particularly where the latter also offers more scope for flexibility in terms of working time and the ability to combine domestic and family commitments with working life. Indeed, as several recent authors have suggested (see, for example Johnson I99I, and Carter and Cannon 1988), it may be that:
"... self-employment represents an attractive option (or in some cases the only viable option) for women who wish (or need) to combine participation in the labour market with domestic responsibilities" {Johnson 1991, pp 8-9).
Strong collateral evidence for this view exists in the case of the UK, based on detailed analysis of the characteristics of self-employed women, from the Labour Force Survey in that
country {Daly 1991), which shows that:
"In all age groupsself-employment is morecommon among women with children, and more common among those with two or more than those with just one. It is also apparent that the younger those children are the greater the effect, with higher rates for those with children under 10. Moreover, there are differences in each age group, confirming that the presence of children is a more important influence than marital status." {Daly 1991, p 117)
This is consistent with the case study evidence that the potential flexibility offered by self-employment to women who wish to combine the care of young children with economic activity may be an important motivator for self-employment entry. For the time being, however, such hypotheses must remain unconfirmed at any general EC-wide level, although
the relatively poor level of provision of state-funded childcare in the UK'® compared with
some other EC countries may mean that such pressures on working women are greater in theUK.
3.1.2 Age
Previous studies have shown (see, for example. Meager, Kaiser and Dietrich 1992, Aronson 1991) that the propensity to be self-employed (as measured by the self-employment rate) increases strongly with age. Table 3.2 confirms that this pattern holds for all the EC countries for which we have data, and that the pattern is remarkably uniform across countries.
Thus in each of the three broad country groups we identified in Chapter 2 ("high", "average"
and "low" self-employment countries), the patternof increase in self-employment rates is very similar between in the countriesin the group in question. The main deviation from the pattern is the UK, where rather than increasing steadily with age, the self-employment rate in 1989 increases with age up to the mid-30s, and then remains relatively constant (at about 15 per cent) until normal retirement age, beyond which it doubles to over thirty per cent (in 1989 the pattern was similar, except that there was even a slight decline in the rate after age 45, before picking up again in the post-65 age range). More detailed analysis (not shown here)
The effects of which are likely to be only partly offset by the relatively widespread availability of part-time employment In the UK compared with other European countries (see Maier 1991).
reveals moreover that this pattern holds true for both men and women - that is in all countries, the self-employment rate increases with age among both sexes, and in all countries (with the exception of Portugal) the female self-employment rate for any age group lies below the male rate for that age group.
Table 3.2: Self-employment rates by age: males and females.
1989 data (1983 figures in brackets)
under 20 20-24 25-34 35-44 45-54 55-64 65+ All ages
D 0.3 1.6 6.0 11.0 11.4 17.9 51.7 9.1
(0.2) (1.3) (6.4) (10.1) (11.4) (16.6) (42.9) (9.0)
DK * 1.5 5.8 10.4 13.1 17.3 36.7 9.2
(*) (1.4) (6.9) (12.8) (15.5) (22.1) (48.3) (11.6)
NL 5.0 2.9 6.4 11.6 13.7 20.4 58.6 10.0
(*) (2.2) (7.3) (10.9) (13.3) (18.1) (58.0) (9.5)
F * 3.0 8.1 12.4 16.6 29.6 49.2 12.5
(0.7) (2.7) (8.4) (12.9) (16.8) (29.8) (57.0) (12.8)
UK 2.7 7.6 13.0 15.6 15.7 15.5 34.2 13.2
(1.8) (4.6) (10.3) (12.8) (11.2) (11.9) (25.8) (10.2)
B * 5.7 12.7 16.4 20.5 34.7 72.9 16.1
(*) (4.8) (11.3) (15.4) (19.4) (28.6) (70.6) (14.7)
E 2.6 11 15.0 23.1 28.8 36.7 63.1 21.6
IRL * 5.8 14.1 26.3 31.8 43.8 74.1 22.2
(*) (3.7) (14.8) (26.8) (31.3) (39.8) (72.4) (21.3)
I 4.3 10.0 19.9 23.8 29.2 42.2 66.2 24.6
(5.0) (9.9) (17.5) (24.8) (29.4) (38.7) (71.8) (23.9)
P 3.5 l.A 16.5 25.2 35.0 49.0 76.9 26.3
GR 4.6 10.8 23.3 33.4 41.3 55.9 71.3 34.3
(4.6) (11.2) (27.0) (37.4) (43.1) (54.1) (70.1) (36.6) Source: own calculations from ELFS.
Note: indicates cell sizes too small for reliable estimates to be made
What is implied by this common pattern of self-employment rates growing with age? It needs to be interpreted with some caution, as it does not necessarily mean that the likelihood of someone entering self-employment increases with age, as some earlier authors have suggested.
This is because the age distributions shown in Table 3.2 contain a cumulative element (many of the older self-employed will have entered self-employment when younger, and remained self-employed). Clearly, given this cumulative component, it is possible that self-employment rates would increase with age, even if the likelihood of someone entering self-employment did not vary with age. To check this possibility, we really need an analysis of the age composition of the flows of people entering self-employment (see Chapter 4 for an attempt to construct "quasi-flow" data from the ELFS data). Some earlier work in other countries with flow data (see, for example, the analysis of Blanchflower and Meyer 1991 for Australia and
the USA), does however confirm that entry to self-employment is more likely among older people. Most of the flows evidence is American, given the more widespread availability of longidutinal data sets in the US, although even in this country the evidence is by no means unambiguous, with Evans and Leighton 1989 finding with their data set that the probability of an individual moving from employment to self-employment is independent of age.
The notion that self-employment propensities are likely to increase with age is, however, an intuitive one. Entry to self-employment often depends on the potential entrant having accumulated a sufficient volume of personalfinancial capital, or appropriate collateral against which capital can be raised. It is reasonable to expect that such accumulation would increase, ceteris paribus, with age (it is also probable that under-capitalised self-employed people, even when they are able to set up in business, are less likely to make a success of their enterprise than others). Similarly it is also arguable that a certain amount of accumulated human capital may be associated with both entry to, and survival in self-employment. Many of the kinds of personal characteristics typically associated with setting up successfully in self-employment are acquired with age - relevant work experience, and networks of personal contacts are notable examples.
There are, therefore, good reasons to expect that both entry rates and survival rates in self-employment might increase with age, and such an explanation is consistent with the strong growth in self-employment rates with age revealed in Table 3.2". As noted above, the main variation in the self-employment rate/age relationshp between countries is the "steepness" of that relationship. The UK stands out, in particular, as having a much flatter self-employment rate/age profile than that of other countries with a broadly similar overall rate of self-employment (such as France, Germany, Denmark and the Netherlands). Compared with these countries, the UK starts with somewhat higher self-employment rates in the youngest age groups, but these rates increase much less rapidly with age, particularly during the middle age ranges. Part of this difference might simply be a "cohort" effect - thus the UK had, as we have seen, by far the fastest rate of growth in self-employment during the 1980s, and by 1989 the UK stock of self-employment will by definition have contained a higher proportion of recent entrants to self-employment than the stock in other countries. Under reasonable assumptions, new entrants will on average be younger than the existing self-employed stock.
There may however, be other explanations for the distinctive UK pattern. In particular we might expect that certain specific institutional differences between the UK environment and that of its continental counterparts may play a role here. Firstly, it is clear, that the initial
" Weshould also note, however, that the pattern may be more complex than this. In particular,
some authors have argued that the propensity to enter self-employment or to set up a small business does not increase with age throughout the life-cycle, but rather peaks in the middle age ranges. This is the so-called "age launch window" effect of Curran and Burrows 1988, who argue that the age range between the early 30s and mid 40s may be when the "combination of ambition, experience, energy and access to capital are at their most favourable for those predisposed to go into business for themselves" (although this is not strictly observable from Cuiran and Burrows' data which are cross-sectional stock data rather than flow data). Other authors have gone further (see Johnson 1991) and argued that changes in the demographic structure,notably an earlier "baby boom" moving into the "age launch window" period, may have been an important contributory factor in the rapid recent growth of aggregate self-employment in countries such as the UK.
training system for young people is very different in most continental countries from that in