Economy and Divorces: Their Impact Over Time on the Self-Employment Rates in Spain

The paper used time-series data and examined the effect of economic and social variables on the male and female self-employment rates in Spain. We also employed cointegration analysis (with and without) structural breaks. We thus find strong evidence that long run relationships exist among the variables. More precisely, we find that the unemployment rates and the ratio of self-employment to employees’ earnings have a positive effect on self-employment, whereas, economic development and divorce rates have a negative effect. Importantly, we find that the economic variables have equal or stronger long run impact on females than males, with both groups reacting to changes in family circumstances. Finally, we show that the short run family circumstances are better predictors of self-employment choices rather than economic factors, with self-employment being a means of adjustment to new personal circumstances and economic needs.