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The rise of self-employment in the UK: entrepreneurial transmission or declining job quality

The UK has experienced very significant growth in self-employment since the financial crisis. The self-employed are at higher risk of income volatility while facing lower levels of social insurance. Individual transitions into self-employment may be driven by a range of factors, both ‘pull’ and ‘push’. This paper proposes a re-evaluation of the evidence on whether private sector business organisations stimulate entrepreneurial transmission amongst their employees. In the UK context rising self-employment may reflect the consequences of flexibilization and falling job quality, rather than outright job loss. Previous research has focused mainly on the subjective notion of job satisfaction to identify the level of attachment the future self-employed have to their current employer. Quantitative analysis is undertaken using large scale British longitudinal survey data.

The paper extends this work to show that organisational (dis)attachment is evidenced in a range of extrinsic indicators of job quality, providing explanatory information beyond intrinsic job satisfaction. Specifically, the paper shows that the impact of training on self-employment entry depends asymmetrically on the source of that training. Finally, the paper argues that reduced attachment provides an alternative explanation for any ‘entrepreneurial transmission’ effect, through which employees, particularly those in smaller organizations, are more likely to enter self-employment. However, anticipated improvement in the experience of work from choosing self-employment is seen to be somewhat illusory, speaking to growing concerns about the impact of the growth of the gig economy.

This paper was published by Professor Andrew Henley, Professor of Entrepreneurship and Economics and Director of Research Engagement and Impact at Cardiff University. He is also a member of the TPI Executive Team and academic lead for the Wales Productivity Forum. This article was published in the Cambridge Journal of Economics, Volume 45, Issue 3, May 2021, Pages 457–486

Themes

  • Human Capital

Published

03/04/2021

Cite

A. Henley (2021) Henley A. (2021). The rise of self-employment in the UK: entrepreneurial transmission or declining job quality?. Cambridge Journal of Economics