How do country R&D change the allocation of self-employment across different types?

Abstract

We investigate the impact of country R&D on the allocation of self-employment across different types, where types are identified based on occupational status and start-up motive. We first conduct a literature review based on which we consider the self-employed with employees to be of higher ‘quality’ (in terms of their overall contribution to the economy) compared to independent own-account workers, who in turn may be considered of higher ‘quality’ than dependent self-employed workers. Similarly, we also consider opportunity self-employed to be of higher ‘quality’ than necessity self-employed. Our empirical analysis then shows that the level of a country’s R&D expenditures increases the share of self-employed with employees and that of opportunity self-employed (i.e. the self-employment types associated with higher ‘quality’) at the cost of the shares of dependent self-employed and necessity self-employed. Higher R&D expenditures at the country level thus increase the quality of self-employment in the country.