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NOTE: Since 2009 the title of the International Journal of Entrepreneurship Education (IJEE) has been changed to the title above.  ISSN numbers: IJEE 1649-2269 and IRE 2009-2822

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ISSN Number: 2009-2822. Frequency: 4 Issues per year (online only)  

Article #1511 - Determinants of the Own-Account Worker’s Decision to Hire Employees: A Review

IRE Vol 13: Issue 2, 2015 , Pages 129-142

Author(s): Ana Millán (Autonomous University of Barcelona, Spain), José María Millán and Concepción Román (University of Huelva, Spain), and André van Stel (Trinity College Dublin, Ireland and Kozminski University, Warsaw, Poland)

Given the increasing numbers of own-account workers in many European economies, an important question for policy makers is to what extent these own-account workers move on to become employers. Yet, empirical research on job creation by own-account workers hardly exists. This paper reviews a small stream of empirical literature which, by using the European Community Household Panel (ECHP), focuses on the determinants of the own-account worker’s decision to hire employees. At the individual level, our review suggests the importance of both human capital and liquidity constraints for the decision of hiring employees. At an aggregated level, we find that own-account workers are less likely to hire employees during recessions. Finally, we also detect the importance of some factors at the environmental and institutional level such as a higher education level of employees and consumers, a higher expenditure on employment incentives and a lower degree of employment protection. The evidence from our review may be useful for governments aiming to create a more enabling micro- and macro-environment for employment growth.

Keywords: own-account worker, employer, self-employment, hiring, job creation, Europe

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