By: David Margolis (CES – Centre d’économie de la Sorbonne – UP1 – Université Panthéon-Sorbonne – CNRS, EEP-PSE – Ecole d’Économie de Paris – Paris School of Economics, IZA – Institute for the Study of Labor)
Over half of all workers in the developing world are self-employed. Although some self-employment is chosen by entrepreneurs with well-defined projects and ambitions, roughly two thirds results from individuals having no better alternatives. The importance of self-employment in the overall distribution of jobs is determined by many factors, including social protection systems, labor market frictions, the business environment, and labor market institutions. However, self-employment in the developing world tends to be low productivity employment, and as countries move up the development path, the availability of wage employment grows and the mix of jobs changes.