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Erschienen in: Small Business Economics 3/2021

15.06.2020

Effects of self-employment on hospitalizations: instrumental variables analysis of social security data

verfasst von: Judite Gonçalves, Pedro S. Martins

Erschienen in: Small Business Economics | Ausgabe 3/2021

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Abstract

The importance of self-employment and small businesses raises questions about their health effects and public policy implications, which can only be addressed with suitable data. We explore the relationship between self-employment and health by drawing on comprehensive longitudinal administrative data to explore variation in individual work status and by applying novel instrumental variables. We focus on an objective outcome—hospital admissions—that is not subject to recall or other biases that may affect previous studies. Our main findings, based on a sample of about 6,500 individuals followed monthly from 2005 to 2011 and who switch between self-employment and wage work along that period, suggest that self-employment has a positive effect on health as it reduces the likelihood of hospital admission by at least half.

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Fußnoten
1
Note that the COVID-19 crisis and its aftermath may contribute to the growth of self-employment, as wage employment opportunities in the labor market will decrease. Additionally, the COVID-19 crisis may lead to a larger share of wage employment conducted under remote work formats given their social/physical distancing properties. Such remote work formats are typically more common among the self-employed, which may lead to some blurring of the differentiation between wage work and self-employment.
 
2
See, e.g., Ingre (2017) for a discussion of the job strain model with respect to the appropriateness of the interaction between the job demand and job control dimensions in Karasek’s model.
 
3
https://www.pordata.pt/Portugal/Despesa+corrente+em+ cuidados+de+saúde+total+e+por+tipo+de+prestador-2958
 
4
https://www.pordata.pt/Portugal/Despesa+da+Segurança+ Social+com+alguns+subs%C3%ADdios+à+população+activa-116
 
5
We opt for the linear probability model given the computational difficulties associated with applying instrumental variables methods to nonlinear panel data models, especially when various large vectors of fixed effects are included. To investigate if the chosen functional form is appropriate, we estimated the logit/panel logit versions of Models 1 and 2 (i.e., with or without individual fixed effects), which provided marginal effects similar to the ones obtained with the linear versions.
 
6
Some individuals who receive income from both self-employment and wage work in some months are counted as self-employed. Excluding these observations provides almost identical results.
 
7
For simplicity, we only refer to districts throughout the text, i.e., each island is treated as a district.
 
8
We also explore non-linearities in the first-stage equation by including the squared terms of the instruments. In the case of instrument two, the squared term is not statistically significant. In the case of instrument one, the squared term is negative and statistically significant, but results are virtually unchanged, so we keep the simpler model.
 
9
These first-stage coefficients are much larger than the ones obtained when using the full sample (Panel B). This is because the switchers sample excludes all individuals that are always wage workers or always self-employed, i.e., individuals that don’t respond to changes in the labor market as captured by the instruments. Recall that in the full sample, only 4.24% of the observations are self-employed; in the subsample of switchers, this proportion increases to 38.29% (Table 1). The difference in effect size of the instruments when looking at the full sample versus the subsample of switchers can be interpreted in relation to these proportions of self-employment in each sample.
 
10
In the model without individual fixed effects, instrument one actually has a small t-statistic and the F-statistic is also small (Panel B, Model 3).
 
11
Instrumental variables estimation using only instrument one or instrument two produces identical results.
 
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Metadaten
Titel
Effects of self-employment on hospitalizations: instrumental variables analysis of social security data
verfasst von
Judite Gonçalves
Pedro S. Martins
Publikationsdatum
15.06.2020
Verlag
Springer US
Erschienen in
Small Business Economics / Ausgabe 3/2021
Print ISSN: 0921-898X
Elektronische ISSN: 1573-0913
DOI
https://doi.org/10.1007/s11187-020-00360-w

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