The entry and exit
dynamics of self-employment in Canada
by Zhengxi Lin, Garnett Picot and
Janice Yates
Business and Labour Market Analysis Division
Analytical Studies
Branch research paper series, No. 134
Previous research found little association
between poor economic conditions and the recent rise in self-employment. This
paper extends the analysis by looking at the dynamics of the phenomenon. It explores
transitions to and from self-employment and investigates the influence of individual
characteristics and labour market experience.
As in paid employment, younger
Canadians are subject to higher turnover in self-employment. Prior paid-employment
experience and prior self-employment experience are both found to be associated
with a higher likelihood of entering self-employment. The longer a person is self-employed,
the less likely he/she is going to leave the business. Having a spouse in business
(being self-employed) substantially increases the likelihood of the other spouse
becoming self-employed. There is also evidence that the presence of a full-time
full-year paid-employed spouse increases the self-employed worker's (the other
spouse's) ability to continue with the business venture and hence reduces the
likelihood of leaving self-employment.
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