Self-Employment, Education, and Employment Protection

Florian Baumann, Tobias Brändle
Eberhard Karls University, Germany

Increasing self-employment and promoting education become more and more popular measures for fighting unemployment. This paper investigates how employment protection affects individuals' choice whether to become self-employed, given different educational attainment. We present a model where occupational choices depend on expected income from available opportunities and analyse the consequences of the interaction between employment protection and educational attainment on the decision to become self-employed. We test our hypotheses using data from the European and World Value Survey. Taking into account the peculiarity of our multilevel data set, we find that employment protection increases the probability of becoming self-employed, while higher educational attainment reduces it. Alas, we cannot confirm that individuals with less education are affected stronger by employment protection legislation.

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