Self-Employment in Chile, Long Run Trends and Education and Age Structures Changes

  • Esteban Puentes

Abstract

This paper studies long-term trends of self-employment in Chile. Self-employment
is associated with poor job conditions, vulnerability, and instability or informal
labor market. Contrary to what is expected, self- employment level does not
respond to macroeconomic variables. Using forty-one cross sections of the
longest Employment Survey available, we show that there is little correlation of
the economic cycle with variations in self-employment. Cohort effects are also
unimportant. In fact, age is the most important predictor of self- employment;
older people are more likely to be self-employed. In addition, we performed a
decomposition of changes in self-employment on changes in coefficients, which
are a measure of the returns to individual characteristics, and on changes in
characteristics. The results indicate that self-employment should have decreased
given the changes in individual characteristics, but was prevented by changes in
coefficients. We also find indirect evidence that these changes in parameters are
not correlated with macroeconomic variables. Finally, the changes in individual
characteristics, such as education and age, and changes in their coefficients
account for most of the changes in self-employment.
Keywords Informal employment, cohort analysis, oaxaca decomposition
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How to Cite
Puentes, E. (2016). Self-Employment in Chile, Long Run Trends and Education and Age Structures Changes. Estudios de Economía, 34(2), pp. 203-247. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/40348/43448
Section
Articles
Published
2016-04-28