Self-Employment in New Zealand

This paper provides a preliminary analysis of self-employment in New Zealand. Using census data from Supennap3 and HLFS data, we find that self-employment is growing with an increased proportion of the labour force being self-employed now than in 1986. This growth is however quite modest. Pull factors attracting people to self-employment appear to be stronger than push factors whereby people enter self-employment because of lack of alternative opportunities. However, results are not definitive. A possible causal relationship between self-employment and unemployment is explored using a time-series regression model. Results suggest a negative and significant relationship between self-employment and lagged unemployment rate. We also observe a weak but positive influence of the ECA, tax and intellectual property rights reforms on self-employment. There are regional differences in regard to factors that could be influencing individuals' decisions to enter into self-employment. While pull factors may explain entry into self-employment for Tasman, Marlborough, Southland and West Coast regions, unemployment appears to be a strong factor for Northland, Taranaki, Waikato, and the Bay of Plenty. The analysis also looks at self-employment by occupation, qualifications, income, industry, age, gender and ethnicity. The paper concludes by mentioning policy implications and suggesting future research.