Abstract
Using cross-country time series panel regressions from 1995 to 2020 for European OECD countries, this paper seeks to identify the main labour market and tax policies that explain the share of self-employment across European countries. Most importantly, the paper uncovers heterogeneous policy impacts for different forms of self-employment including own-account workers and self-employment with employees. It also looks at how the share of self-employed correlates with changes in policies along other dimension including gender, age and skills. Minimum wages and Employment Protection Legislation (EPL) appear to be associated robustly with changes in long-term share of own-account self-employed in European OECD countries, in particular Western European economies, whereas self-employed with employees appear to coincide with changes in the tax wedge and unemployment benefits. De-industrialisation is found to be positively correlated with self-employment. Finally, self-employment exhibits some cyclical properties: the share of own-account workers rises during downturns whereas self-employment with employees becomes more prominent during economic booms.