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Small Business Economics
Published in: Small Business Economics 2/2020

03-09-2019

Do freelance independent contractors promote entrepreneurship?

Authors: Andrew Burke, Imran Zawwar, Stephanie Hussels

Published in: Small Business Economics | Issue 2/2020

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Abstract

We investigate whether or not the level of entrepreneurial activity in an economy is determined by the availability of freelance independent contractors in the workforce. We develop hypotheses and test them through an analysis of 75 countries from 2002 to 2012 using the Global Entrepreneurship Monitor (GEM) database. We find freelance independent contractors promote entrepreneurial activity where typically a 10% rise in the freelance workforce causes about a 1% increase in entrepreneurial activity. The significance of this positive effect is robust for both necessity and opportunity-driven entrepreneurial types and across innovation-driven and efficiency-driven economies—but it is stronger in innovation-driven economies and also for necessity entrepreneurship. It implies that having a flexible workforce is a key ingredient to having an entrepreneurial economy. Furthermore, it indicates that orthodox research and public policy perspectives which overlook the importance of freelance independent contractors for entrepreneurship activity require a re-appraisal.
previous article The relationship between freelance workforce intensity, business performance and job creation
next article Analyzing the changing education distributions of solo self-employed workers and employer entrepreneurs in Europe

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Appendix
Available only for authorised users
Footnotes
1
The measure of GDP used in our analysis is in PPP at constant prices of 2011 in USD, having data in PPP ensures comparison across the countries while holding it constant at 2011 prices ensures comparability across time (see Feenstra et al. (2015)).
 
2
We choose 0.05 as the value for (g + d) (see Caselli et al. 1996; Islam 1995 and Mankiw et al. 1992).
 
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Metadata
Title
Do freelance independent contractors promote entrepreneurship?
Authors
Andrew Burke
Imran Zawwar
Stephanie Hussels
Publication date
03-09-2019
Publisher
Springer US
Published in
Small Business Economics / Issue 2/2020
Print ISSN: 0921-898X
Electronic ISSN: 1573-0913
DOI
https://doi.org/10.1007/s11187-019-00242-w

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