Being your own boss: the many faces of self-employment

The number of individuals registered as self-employed in the UK has grown considerably over the past decade. The economics literature generally agrees that the self-employed work longer hours than their counterparts who are in paid employment and earn less. However, most of the literature considers the self-employed as a homogeneous group of individuals, whereas in reality, the term now encompasses a variety of very different entrepreneurs, such as businesses or partnerships, sole traders, freelance workers and sub-contractors. Using UK panel data, this paper examines the differences in the characteristics of self-employed individuals by self-employment type to highlight the difference between these groups and their employed counterparts. Random effect probit estimations that model the determinants of being in different self-employment groups highlight the heterogeneous nature of self-employment and their different determinants. Wage estimations reveal different returns to separate classifications of self-employment.