Department of Finance’s publication of research on self-employment

by HRHQ Editorial Team

The Department of Finance recentlyy published analysis conducted jointly with the Economic and Social Research Institute, which examines the determinants of self-employment across the economic cycle. The findings demonstrate a strong impact of the economic cycle on the decision to enter into self-employment and present a key resource for future policy measures aimed at growing the economy.

The self-employed make up a substantial and important proportion of the workforce, and are one of the driving forces behind economic growth over time. In that respect, understanding self-employment and its drivers is key to contextualising policy interventions aimed at supporting innovation and growing employment through this channel.

The findings identify distinct drivers motivating self-employment entry and exit at different points of the economic cycle. The research shows that the composition of entry into self-employment shifts substantially toward individuals entering from unemployment during recessions and that this type of entrant is characteristically less likely to innovate. That said, there is an important role for this type of activity in avoiding ‘scarring’ effects on the labour force during downturns.

The results will support the Government in framing interventions in terms of self-employment for a given policy objective.

Commenting on the Department’s analysis, Minister for Finance, Michael McGrath T.D., said;

“I welcome the publication of this analysis which adds significant context to policy levers in terms of entrepreneurship and self-employment. The finding that the composition of self-employment varies considerably with the economic cycle is economically significant, and provides robust context for policies aimed at improving the entrepreneurial environment in order to boost long–term economic growth.”

Flows in and out of self-employment