Self-employment in Denmark and Spain: Institution, Economic Conditions and Gender differences

Among the OECD countries, Spain faces one of the highest rates of self-employment and Denmark one of the lowest, being the difference specially relevant among women. These two countries present important differences in their institutional environment and labour market conditions: the level of labour market flexibility and the importance of parttime employment, the generosity of the unemployment benefit systems, and the role of the child care policies, among others. In this paper we compare the Danish and Spanish labour markets and analyze to what extent the different evolution of female and male self-employment rates are influenced by country-specific employment conditions. This study is carried out for men and women separately using a strictly comparable panel data set for the two countries. The results indicate that in Spain self-employment seems to offer individuals who normally are considered as marginalized in the labour market a beneficial alternative to wage employment, while this pattern is not so clear in Denmark. Our analysis suggests that an important factor in explaining the difference in Danish and Spanish self-employment rates is the different employment environment that both countries face.