New Entrants to and Determinants of Survival of Youth Self-Employment in Spain
Data drawn from the 2004 to 2013 Continuous Sample of Working Lives (CSWL) will be used. The dataset includes information on the employment spells and previous labour market trajectory of a sample of all individuals with any type of relationship to the Social Security (i.e. employed, unemployed receiving benefits or pensioner).
The reason to undertake self-employment has been found a determinant of survival (Block and Sandner, 2009; Giacomin, 2011; Furdas and Kohn, 2011). ‘Necessity’ (‘push’) entrepreneurs seem less likely to survive than ‘opportunity’ (‘pull’) entrepreneurs (Amit and Muller, 1994; Reynolds et al., 2001). The former are defined as those who lost their job and decided to move to self-employment; the latter are persons who perceive self-employment as a challenge that may provide potential rewards. Using the 2004 to 2013 Continuous Sample of Working Lives we will thus distinguish entrepreneurs according to their labour market status immediately before they become self-employed: new self-employed workers transiting from employment as ‘pull’ entrepreneurs, and those transiting from unemployment or non-participation in the labour market as ‘push’ entrepreneurs (Baptista et al., 2013).
Our first hypothesis is that ‘push’ entrepreneurship has increased, especially for low employability groups, due to the scarcity of waged employment. Preliminary analyses of the proportion of young workers entering self-employment from employment (decreasing) and of the probability of entering self-employment from unemployment by education (higher among the less qualified) seem to confirm said hypothesis.
Regarding outflows from self-employment, the survival rate of new businesses after one year was 70% before the crisis (2004-2007), and has dropped to 60% now. Generally young self-employed workers have lower probabilities of survival than older workers. We will consider as possible determinants of survival the socioeconomic characteristics of the individuals (sex, age, level of education), their labour market trajectory (in terms of previous working periods and number of employment spells) and the industry of the business. Our hypotheses in this regard are: i) that previous labour market experience has a positive effect on survival; ii) that high qualified self-employed workers have a greater probability of survival than low qualified workers; and iii) that ‘push’ entrepreneurs have lower survival probabilities than ‘pull’ entrepreneurs. Preliminary results suggest that young workers have a disadvantage when entering self-employment because of their lack of experience in the labour market. Moreover, a possible selection bias arises since less qualified individuals have a greater probability of self-employment while their low qualification reduces their survival probability.
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