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Working Paper No. 845

Using Self-employment as Proxy for Entrepreneurship: Some Empirical Caveats

Working Paper
Bjuggren, Carl Magnus, Dan Johansson and Mikael Stenkula (2010). “Using Self-employment as Proxy for Entrepreneurship: Some Empirical Caveats”. IFN Working Paper No. 845. Stockholm: Research Institute of Industrial Economics (IFN).

Carl Magnus Bjuggren, Dan Johansson, Mikael Stenkula

Research on entrepreneurship has received an increased amount of interest in recent years, with self-employment being used as the most common proxy for “entrepreneurship” in empirical studies. However, there are various ways of defining self-employment, making it a somewhat dubious proxy. This may flaw the analysis, especially in cross-country studies, since the documentation of data often is insufficient and difficult to access due to language barriers. We present an analysis of Swedish self-employment data. We show that the measurement of self-employment has changed over time to noticeably affect the reported number of self-employed in the two major statistical sources on self-employment. The reported development of self-employment sometimes differs diametrically depending on source. Sweden is occasionally erroneously reported to show the largest increase in self-employment in cross-country studies. Our study mimics the results of other country-specific analyses and we conclude that well-grounded conclusions require that the advantages and disadvantages of different statistical sources are recognized.