The impact of self-employment on subjective well-being in Europe

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Master Thesis Business Administration: Small Business & Entrepreneurship

The impact of self-employment on subjective well-being in Europe

Abstract

Previous research has shown that self-employment positively influences individual’s subjective well-being levels and it is important to take heterogeneity between different groups of self-employed in consideration. The aim of this study is to uncover explanations for differences in subjective well-being found among the self-employed. The results of this study are based on the Sixth wave of the European Working Conditions Survey from Eurofound. A total of 40.981 organizationally-employed and self-employed individuals from 35 European countries were included in the analysis. The results show that the self-employed do not per se have a higher level of subjective well-being than the organizationally-employed, but differences exist between groups of self-employed. Having employees as self-employed has a positive effect on the subjective well-being level of the self-employed, while this effect is negative if the self-employed does not have employees. Furthermore, self-employed men have higher levels of subjective well-being than the organizationally-employed. This positive effect of self-employment does not exist for women. Finally, nature of self-employment is a moderating factor which, in this research, has most impact on the subjective well-being of the self-employed. Opportunity self-employment positively influences subjective well-being of the self-employed, while a negative effect exists between necessity self-employment and subjective well-being.

Keywords: Self-employment, Subjective well-being, Employees, Gender, Nature of self-employment,

Opportunity, Necessity

University of Groningen Faculty of Economics and Business

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1. Introduction

Self-employment and entrepreneurship are becoming more important in European countries as a source of economic growth and job creation (Thurik, Carree, Van Stel, Audretsch, 2008). In 2015, the self-employed formed a sizable proportion of the European Union 28’s labour force (14,9%), but according to the European Commission, this proportion needs to increase (Eurofound, 2017). More entrepreneurs are needed to bring Europe back to growth and reach higher employment levels. Initiatives to promote entrepreneurship highlight the positive effects that are associated with self-employment, such as skill development and flexibility of time and place of work (European Commission, 2012). These positive aspects of self-employment are also empirically supported. Despite making more working hours, having lower initial earnings and lower earnings growth, the self-employed are more satisfied with their jobs than organizationally-self-employed, because their work provides more autonomy, flexibility, skill utilization and greater job security (Carter, 2011; Hamilton, 2000; Hundley, 2001).

A lot of research has been conducted on the determinants of, or reasons for, pursuing self-employment (Douglas & Shepherd, 2002; Hamilton, 2000; Kolvereid, 1996). This stream of research mainly focuses on the positive aspects of employment that attract people to become self-employed. Comparatively, only little research has been conducted on the consequences and outcomes of self-employment in terms of health and well-being (Dolinsky & Caputo, 2003; Sevä, Vinberg, Nordenmark & Strandh, 2016). Furthermore, there are a number of studies looking at the subjective well-being of organizationally-employed, but only few studies focus on the self-employed from this perspective (Andersson, 2008; Hilbrecht & Lero, 2014). Of the studies that have been conducted, most research findings suggest a positive relationship between self-employment and subjective well-being (Andersson, 2008; Blanchflower, 2004; Sevä et al., 2016). However, not all studies find this positive relation between self-employment and subjective well-being and point out differences in subjective well-being among groups of self-employed (Jamal, 1997; Sevä et al., 2016).

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additional explanation might be found in the nature of self-employment, or the motivation to become self-employed. Since 2001, the Global Entrepreneurship Monitor has discussed that, based on the motivation to become self-employed, two types of self-employed exist: opportunity self-employed and necessity self-employed (Reynolds et al., 2005). The opportunity self-employed start a business in order to pursue an opportunity, while necessity self-employment is more requirement-based and mainly arises when an individual has no other alternatives for work.

Another individual level condition that will be investigated in this study is employees. Previous research showed that these factors intersect with both self-employment and subjective well-being (Sevä et al., 2016; Benavides, Benach, Diez-Roux & Roman, 2000; Blanchflower, 2004). Sevä et al. (2016) reported that self-employed with employees have higher levels of life satisfaction compared to the self-employed without employees. Furthermore, Benavides et al. (2000) found that self-employed without employees report higher levels of job dissatisfaction and muscular pains than the self-employed with employees. Although these arguments all sound in favour of having employees, Benavides et al. (2000) reported that having employees increases stress levels of the self-employed which negatively influences their well-being. Furthermore, this research will investigate the individual level condition gender. Despite the fact that the majority of self-employed are men, the number of self-employed women has been increasing over the last couple of years (Eurofound, 2017). The research results of Sevä et al. (2016) indicate that self-employment has a positive effect on subjective well-being for both men and women.

The goal of this study is to uncover explanations for differences in subjective well-being found among groups of self-employed. This research aims to extend previous research by examining whether employees, gender and nature of self-employment are significant factors affecting the relationship between self-employment and subjective well-being. The main research question for this research is:

What effect do the individual level conditions employees, gender and nature of self-employment have on the relation between self-employment and subjective well-being?

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2. Theoretical background and hypotheses

Douglas and Shepherd (2000) state that individuals choose a career path that maximizes their utility. An individual chooses to become self-employed if the total utility that an individual expects to derive from self-employment (via their income and the working conditions such as decision-making control, exposure to risks, required work effort and net perquisites associated with self-employment) is greater than the expected derived utility from being organizationally-employed. Therefore, self-employment can be seen as an utility-maximizing career choice by an individual.

Once an individual chose an occupational type and started working, work will become a major aspect of human life and will have strong effects on the individuals’ satisfaction with life (Binder & Coad, 2013). A way to measure individuals’ satisfaction with life is by assessing an individual’s subjective well-being. The study field of subjective well-being concerns what people call happiness or satisfaction. Although every individuals’ personality differs and therefore explains a significant variability in subjective well-being, life circumstances, such as occupational type, influence the long-term well-being levels of individuals and societies (Diener, Oishi & Lucas, 2003).

This research will investigate the effect of self-employment on an individuals’ subjective well-being and if this effect is different among groups of self-employed. The literature review is divided into five sections. The first section reviews the existing literature on self-employment and subjective well-being, the second section reviews the existing literature on self-employment with and without employees, the third reviews the existing literature on male and female self-employment, the fourth section reviews the existing literature on the nature of becoming self-employed and the final section describes the conceptual models for this research.

2.1 Self-employment and subjective well-being

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On the other hand, self-employment can also be connected to factors that lead to a lower subjective well-being. First of all, research suggest that self-employed have lower initial earnings and lower earnings growth than in paid employment (Hamilton, 2000). Furthermore, the self-employed make more working hours, have less free time and have more responsibility for their own job and incomes, and, in case of the self-employment with employees, for their jobs and incomes as well. Consequently, self-employed experience lower levels of work-life balance as compared to the organizationally-employed (Nordenmark, Vinberg & Strandh, 2012).

Despite the foregoing arguments, most empirical findings on the relationship between self-employment and subjective well-being report that the self-employed in general score higher on subjective well-being than organizationally-employed (Andersson, 2008; Hundley, 2001; Sevä et al., 2016). Hamilton (2000), shows that self-employed are willing to sacrifice earnings in return for the nonpecuniary benefits of self-employment. Furthermore, Binder and Coad (2013) show that individuals who move from regular employment to self-employment experience an increase in life satisfaction up to two years later. One of the most recent studies linking self-employment to subjective well-being is done by Sevä et al. (2016), who showed that self-employment is positively related to subjective well-being. In order to replicate previous studies and control the varying findings, the following hypothesis is tested in this study:

Hypothesis 1: Self-employment has a positive effect on subjective well-being.

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2.2 Employees

A condition of self-employment on the individual level is whether or not the self-employed has employees. The majority of the self-employed are self-employed without employees (70%) and only about 8% have ten or more employees (Eurofound, 2017). Having employees might have a positive effect on subjective well-being of the self-employed. Sevä et al. (2016) showed that self-employed with employees have a higher level of life-satisfaction than the self-employed without employees. On the other hand, research by Benavides et al. (2000) shows that having employees can also negatively influence subjective well-being of the employed. They showed that the stress levels of the self-employed with employees were higher compared to the self-self-employed without employees. This might be due to the fact that the self-employed, in a work-related atmosphere, is not only responsible for his or her own personal well-being, but for the well-being of the employees as well (Hessels, Rietveld & Van der Zwan, 2017). Although having employees might increase stress levels, Benavides et al. (2000) also found that not having employees has a great negative impact on the well-being of the self-employed. They found that self-employed without employees report higher levels of job dissatisfaction, fatigue and muscular pains than the self-employed with employees. In order to replicate previous studies and control the varying findings, the following hypotheses are tested in this study:

Hypothesis 2a: Having employees has a positive effect on the relationship between self-employment

and subjective well-being.

Hypothesis 2b: Not having employees has a negative effect on the relationship between

self-employment and subjective well-being.

2.3 Gender

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therefore more often emphasize family related reasons to become self-employed. Being self-employed provides them with greater schedule flexibility at work, which makes it easier to combine a family-life with a work-life (Boden, 1999; Budig, 2006; Carr, 1996; Parasuraman & Simmers, 2001). Men, on the other hand, more often emphasize work-related reasons and focus on the earning differences, employment opportunities and job satisfaction to choose self-employment over organizational employment (Georgellis & Wall, 2005; Hilbrecht & Lero, 2014). The fact that women more often emphasize family reasons over financial reasons to become self-employed might imply that women place a higher value to the nonfinancial aspect of self-employment than men do (Clain, 2000). This might imply that employment for women has a bigger impact on the quality of life for self-employed women than self-self-employed men. This is in line with the research findings of Sevä et al. (2016), who found that self-employment only has a positive effect on life satisfaction for women. In order to replicate previous studies and control the findings, the following hypothesis is tested in this study:

Hypothesis 3: Self-employment has a more positive effect on subjective well-being for self-employed

women than for men.

2.4 Nature of self-employment

The third condition that will be investigated in this research is the nature of self-employment. Nature of employment can be explained as the motivation or reason of individuals to become self-employed. Based on the nature of self-employment, two groups of self-employed can be formed. The first group that can be formed is the group of opportunity employed. This is the group of self-employed who choose to become self-self-employed to take advantage of a new business opportunity (Block & Koellinger, 2009; Reynolds et al., 2005). This group is “pulled” into self-employment by the attractiveness of their new business idea (Amit & Muller, 1995). The second group that can be formed is the group of necessity self-employed. This group has no other alternatives for work and is “pushed” into self-employment to generate an income (Amit & Muller, 1995; Block & Koellinger, 2009; Reynolds et al., 2005).

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because they intentionally did not choose to become self-employed (Block & Koellinger, 2009). Furthermore, Binder and Coad (2013) have shown that the way people move into self-employment influences the effect self-employment has on their life satisfaction. Individuals moving from organizational-employment to self-employment experience an increase in life satisfaction, while this effects does not exist for individuals moving from unemployment to self-employment. Choosing for self-employment, instead of being forced into self-employment to generate an income, might therefore have a positive effect on the subjective well-being of the self-employed. Contrary, not being able to choose and being forced into self-employment might have a negative effect on the subjective well-being of the self-employed. In order to replicate previous studies and control the findings, the following hypotheses are tested in this study:

Hypothesis 4a: Opportunity employment has a positive effect on the relationship between

Hypothesis 4b: Necessity employment has a negative effect on the relationship between

2.5 Conceptual models

This section shows the proposed relationships in different conceptual models. Model 1 is the baseline model for this research. Model 2, 3 and 4 represent consecutively the interaction effect of self-employment with employees, self-self-employment with gender and self-self-employment with the nature of self-employment and their effect on subjective well-being. All relationships are controlled for age, gender and educational level.

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3. Data and methods

3.1 Data collection method

The data that is used to test the hypotheses is derived from Eurofound’s Sixth European Working Conditions Survey (ECWS). The data for this survey is collected by Eurofound, the European Foundation for the Improvement of Living and Working Conditions. In 1991, Eurofound carried out the first survey and in 2015 they carried out its sixth survey in the series. By interviewing nearly 44,000 workers face-to-face from 35 European countries, they were able to create an overview of the varying working conditions across Europe. The data used for this thesis covers the working conditions in the 28 EU Member States, the five EU candidate countries (Albania, the former Yugoslav Republic of Macedonia, Montenegro, Servia and Turkey) as well as Norway and Switzerland. The range of questions is very broad and includes information about the interviewee’s work life and working conditions. This survey fits this research perfectly as it is able to make a distinction between type of employment, self-employed with and without employees, nature of becoming self-self-employed and it also contains information about individuals’ subjective well-being. The sample is restricted to include only individuals who were employed at time of the survey and filled in all questions on subjective well-being. The total sample that is used to analyse the hypotheses consists of 40.891 cases.

3.1.1 Dependent variable: subjective well-being

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3.1.2 Independent variable: self-employment status

The main independent variable of this research is self-employment status. To measure whether an individual is self-employed or organizationally-employed the question ‘Are you working as an employee or are you self-employed?’ is used. The group ‘employees’ get a salary from an employer or a temporary employment agency and the group ‘self-employed’ include people who have their own business or are partners in a business as well as freelancers. The self-employed may or may not have employees.

3.1.3 Moderating variables: employees, gender and nature of self-employment

The first moderating variable that is used in this research is whether the self-employed is self-employed with or without employees. The question that is used to measure this variable is: ‘Regarding your business, do you have employees (working for you)?’, which can be answered by either ‘yes’ or ‘no’. The second moderating variable on the individual level is the gender of the self-employed, which is either male or female. The last moderating variable that is used in this research is the nature of self-employment of the self-employed. The question used to measure this variable is: ‘When you became self-employed, was it mainly through your own personal preference or because you had no other alternatives for work?’. The individuals answering ‘mainly through own personal preferences’ are considered to be opportunity self-employed, while individuals answering ‘no other alternatives for work’ are considered to be necessity self-employed.

3.1.4 Control variables: age, gender and educational level

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3.2 Analysis plan

The purpose of the analysis is to examine the relationship between self-employment and subjective well-being. This research starts with a baseline model (model 1) testing the relationship between self-employment and subjective well-being. Each of the moderating variables (employees, gender and nature of self-employment) will be tested in a different model, which resulted in four conceptual models. In model 1 the effect of self-employment on subjective well-being will be measured. By using regression analysis, the subjective well-being levels of the self-employed will be tested with the reference group of organizationally-employed. Model 2 introduces the interaction with having employees or not. Self-employed with employees and self-employed without employees will be tested with the organizationally-employed. Model 3 introduces the interaction with gender. A comparison is made between male and female self-employed and the group of organizationally-employed. Finally, model 4 introduces the nature of employment as a moderator. Opportunity and necessity self-employed are tested to the reference group of organizationally-self-employed.

3.3 Discussion of validity and reliability

The data gathering process for this research has been conducted by Eurofound. In order to assure the quality of the sixth European Working Conditions Survey, Eurofound used state of the art practices in cross-cultural survey methodology. Each stage was carefully planned, monitored and documented. They provide a quality assurance report and build upon the quality assurance reports of previously held surveys. Quality control mechanisms were applied to ensure quality of the research in terms of relevance, accuracy, timeliness and punctuality, accessibility and clarity, and coherence and comparability. Furthermore, Eurofound contracted an independent third party who concluded that the quality of the sixth European Working Conditions Survey is very high, compared to similar surveys and complies to international quality standards (Eurofound, 2015).

First of all, the construct validity has to be checked. This will be done in two steps. The first step is the factor analysis, to analyse whether the questions belonging to one variable correlate with one variable only. If they do not correlate, the questions will be deleted from the database. The second step to check the construct validity, is the reliability analysis on the measurement items remaining after the factor analysis. If the Cronbach Alpha value of the question is higher than or similar to 0.7, the question will be included in the final database. The weighted average of the question belonging to one construct will also be measured.

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4. Results

As mentioned before, the goal of this study is to uncover explanations for differences in subjective well-being found among groups of self-employed. The baseline model, model 1, that is used for this research, focuses on the relationship between self-employment and subjective well-being. Variables that might moderate this relationship are employees, gender and the nature of self-employment, which are added consecutively in model 2, 3 and 4. The research results will be discussed and the hypothesis will be tested.

4.1 Testing of hypotheses

This research only focusses on the people that were (self-)employed by the time taking the interview. People who were unemployed or for other reasons not able or willing to work are taken out of the data file. This resulted in a total sample of 40.891 individuals from 35 countries. The results of this study are presented in table 2.

Starting with the used control variables. It appears that (self-)employed men show significantly higher subjective well-being levels than (self-)employed women (B = ,557, p < 0,05). The second control variable used in this research is age. The group between 25 and 39 have significantly lower levels of subjective well-being (B = -,800, p < 0,05) than the reference group between 65 and 87. While becoming older subjective well-being levels decrease even more. The group between 55 and 64 years have the lowest level of subjective well-being (B = -1,143, p < 0.05). These levels increase again after reaching 65 years of age. The effect of age appears to be U shaped with higher levels of subjective well-being at lower and higher age. The third control variable used is the educational level. It appears that subjective well-being levels increase if the educational level increases. The lowest educated individuals, ISCED 0, score significantly worse subjective well-being levels than the highest educated individuals (B = -2.031, P < 0.05). This significant negative effect of lower education holds for ISCED 0 to ISCED 3 (B = -,551, p < 0.05). Individuals who successfully completed ISCED 4, post-secondary non-tertiary education do not have a significantly lower level of subjective well-being than the highest educated individuals.

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Hypothesis 2a and 2b, the moderating effect of employees on the relationship between self-employment and subjective well-being, are tested in model 2. A linear regression was used to predict subjective well-being from self-employment with employees and self-employment without employees. There was a significant positive relationship between self-employment with employees and subjective well-being (B = ,632, p < 0.05). Self-employed with employees have significantly higher levels of subjective well-being than the self-employed without employees and the organizationally-employed. Therefore, hypothesis 2a can be accepted, having employees has a positive effect on the relation between self-employment and subjective well-being. Furthermore, a negative significant relation was found between self-employment without employees and subjective well-being (B = -,159, P < 0.05). Self-employed without employees have significantly lower levels of subjective well-being than the self-employed with employees and the organizationally-employed. Therefore, hypothesis 2b can be accepted, not having employees has a negative effect on the relation between self-employment and subjective well-being.

Hypothesis 3, the moderating effect of gender of the self-employed, is measured in model 3. Linear regression showed that self-employed men have significantly higher level of subjective well-being than self-employed women and organizationally-employed individuals (B = ,335, P < 0.05). Self-employed women do not have a significantly different level of subjective well-being than the total group of organizationally-employed. Linear regression also considered in group variation between organizationally-employed and self-employed men and organizationally-employed and self-employed women. Linear regression showed no significant differences between organizationally-employed and self-employed men and women at a significance level of p < 0.05. Thus, self-employed men have higher levels of subjective well-being than self-employed women and no significant differences exist between organizationally-employed and self-employed men and women. Therefore, hypothesis 3 cannot be accepted.

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Table 2. Relationship between self-employment, employees, gender and nature of self-employment.

Dependent variable: subjective well-being (WHO5), (0-25) The bold regression coefficients are P < 0.05

M1 M2 M3 M4

B SE B SE B SE B SE

Control Variables

Gender (Ref.: women)

Men ,557 ,050 ,549 ,050 - - ,528 ,050

Age (Ref.: 65 – 87 years)

15 – 24 years -,272 ,192 -,281 ,190 -,241 ,191 -,172 ,190

25 – 39 years -,800 ,169 -,816 ,167 -,780 ,168 -,702 ,167

40 – 54 years -1,088 ,167 -1,107 ,166 -,1,084 ,166 -,999 ,165

55 – 64 years -1,143 ,173 -1,175 ,171 -1,143 ,172 -1,076 ,171

Education (Ref.: ISCED 8)

ISCED 0 -2,031 ,438 -1,977 ,437 -2,055 ,438 -1,816 ,437 ISCED 1 -1,363 ,280 -1,282 ,280 -1,370 ,280 -1,204 ,279 ISCED 2 -,999 ,262 -,954 ,262 -,991 ,262 -,925 ,261 ISCED 3 -,551 ,255 -,521 ,255 -,555 ,256 -,511 ,255 ISCED 4 ,055 ,269 ,085 ,269 ,019 ,269 ,073 ,268 ISCED 5 -,293 ,264 -,263 ,264 -,348 ,265 -,279 ,264 ISCED 6 -,061 ,261 -,040 ,261 -,112 ,262 -,050 ,261 ISCED 7 -,207 ,265 -,188 ,264 -,246 ,265 -,208 ,264 Independent variable

Employment type (Ref.: Organizationally-employed)

Self-employed ,060 ,068

Moderating effects

Employees (Ref.: Organizationally-employed)

Self-employed with employees ,632 ,116

Self-employed without employees -,159 ,079

Gender (Ref.: Organizationally-employed)

Self-employed men ,335 ,082

Self-employed women -,182 ,103

Gender (Ref.: Organizationally-employed men)

Self-employed men ,006 ,086

Gender (Ref.: Organizationally-employed women)

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5. Discussion

The self-employed form with approximately 15% a sizable proportion of the EU28’s labour force. It has long been assumed that this group of self-employed is homogeneous on factors as working rationale and working conditions. Research has shown that this is a false assumption, since the group of self-employed varies on a lot of factors. Therefore, heterogeneity among the self-self-employed is a factor that should be taken in consideration when examining the subjective well-being of the self-employed. By using a large European dataset from Eurofound, this research examines the subjective well-being of the self-employed compared to the organizationally-employed. The moderating effects of employees, gender and the nature of self-employment were taken in consideration. The main aim of this study was to uncover individual level explanations for differences in subjective well-being found among the self-employed.

5.1 Explanation of the findings

The first finding of this research shows that subjective well-being levels of the self-employed do not significantly differ from subjective well-being levels of the organizationally-employed. This means that the type of employment does not have a significant impact on the subjective well-being levels of employed individuals. This finding is in contrast with the results from several previous studies who suggest that self-employed have higher levels of subjective well-being than the organizationally-employed (eg. Andersson, 2008; Blanchflower, 2004; Sevä et al., 2016). This might be due to way subjective well-being is measured in these researches. Andersson (2008), for example, uses six indicators of well-being (job satisfaction, life satisfaction, job stress, whether the job is mentally straining, mental health problems and general health), while Sevä et al. (2016) only use life satisfaction as a measure of subjective well-being. The research results from Nordenmark, Vinberg & Strandh (2012) are in line with the results from this research. They measure subjective well-being by using the World Health Organization-5 index and also find no significant relationship between type of employment and subjective well-being. This might be due to the fact that the WHO-5 index focusses on subjective mental well-being and does not take other types of subjective well-being (eg. physical, economic and social well-being) in consideration (Topp et al., 2015). Andersson (2008), points out that self-employment more often leads to more mental health problems and lower mental well-being than organizationally-employment. Contrary, her research shows that self-employment is positively related to another measure of subjective well-being, life satisfaction. Thus, it depends on the measure of subjective well-being if self-employment has a positive or negative effect on subjective well-being.

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without employees and the organizationally-employed. The self-employed without employees score significantly lower levels of subjective well-being than organizationally-employed. These results are in line with the results from previous studies (Benavides et al., 2000; Sevä et al.,2016). One way to explain these findings is that the self-employed without employees often are personally responsible for financial situation of the organization (Toivanen, Mellner & Vinberg, 2015). This might increase the stress level of the self-employed, since most of the time they are also personally responsible when the organization has debts or goes bankrupt. Furthermore, as compared to the self-employed with employees, the self-employed without employees has to take care of the whole business process by him or herself. The individual is solely responsible for the promotion, sales, logistics, finances and so on. This might lead to greater stress levels and the increased level of felt personal risk (Harris, Saltstone, Framboni, 1999). Another way to explain the positive effect of having employees can be related to the social role of the employees. According to Kawachi and Berkman (2001), social ties have a beneficial role in the maintenance of psychological well-being. As been pointed out by Nordenmark, Vinberg & Strandh (2012), self-employed have more working hours and less free time, which results in significantly lower levels of work-life balance than the organizationally-employed. Having social contact with employees during work time might therefore decrease the negative effect self-employment has on their work-life balance and increase their subjective well-being.

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employed men. This might again be due to the fact that Sevä et al. (2016) used life satisfaction as measure of subjective well-being while this research focuses on subjective mental well-being.

The last finding of this research suggests that the nature of self-employment is of great importance when considering the subjective well-being levels of the self-employed. It appears that the opportunity employed have a higher level of subjective well-being than the necessity self-employed and organizationally-self-employed. Furthermore, the necessity self-self-employed score even lower levels of subjective well-being than the organizationally-employed. This is in line with previous research conducted by Block and Koellinger (2009). They showed that necessity self-employed cannot get satisfaction with their start-up, mainly because they did not choose to become self-employed in the first place. Furthermore, research by Binder and Coad (2013) has shown that individuals moving from unemployment to self-employment, which can be seen as necessity self-employment, do not have an increase in subjective well-being levels. Individuals moving from organizational-employment to self-employment, the opportunity self-employed, appear to have an increase in life satisfaction up to two years later. In more recent research, Binder and Coad (2016) found that opportunity self-employment leads to an increase in overall life satisfaction, due to an increase in work satisfaction and health satisfaction. Individuals forced into self-employment do not experience any of these benefits.

The previously mentioned negative effect of self-employment without employees can also be explained by the nature of self-employment. It might be that the self-employed without employees are more often necessity self-employed (Binder & Coad, 2013). They start a business because they have no other alternative for work and are pushed into self-employment. Therefore, the negative effect of employment without employees can also be linked to the negative effect of self-employment by necessity.

5.2 Implications

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with identifying new business opportunities. Individuals who want to become self-employed to exploit an opportunity are considered to be the individuals with the highest level of subjective well-being. Furthermore, individuals who exploit an opportunity, and therefore have an increased subjective well-being, might eventually set up a business that creates a lot of new jobs and gives a positive boost to a nation’s economy. A final implication can be made for self-employed women. Women more often give family reasons to become employed, but do not experience the same positive effect of self-employment on their subjective well-being as men have. Therefore, it might be advised that employers provide women with working conditions, or more flexibility in working hours, in which they can work full time and still have the possibility to combine work with their family obligations.

5.3 Limitations and future research

Although the Sixth European Working Conditions Survey from Eurofound provides a good opportunity to investigate subjective well-being levels of several groups in Europe, there are some issues which may affect the cross-country comparability of this database. First of all, the cultural aspect should be taken in consideration. According to Eikemo et al. (2008), health expectations may vary according to culture and therefore making direct comparisons of self-rated health and well-being outcomes should be made with caution. The advantage of using the European Working Conditions Survey is that all respondents are asked the same question in the same time period. Secondly, subjective well-being is measured by using the World Health Organization-5 index. The positive effect of this measurement method is that it might decrease the cultural effect of the outcomes of the self-reported health measure. The negative effect is that most other studies measuring subjective well-being use other indicators of subjective well-being, for example life satisfaction or happiness. This makes it harder to compare these study results with other studies. Third, this study did not take other national factors in consideration, such as GDP and income inequalities. These factors might intersect with employment and subjective well-being and might therefore alter the results as well. Fourth, this research only uses the Sixth wave of the EWCS. Therefore, making a comparison over time to see if factors have changed is not possible.

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6. Acknowledgements

I would like to acknowledge and thank the following important people who have supported me during the course of the project and throughout my Master’s degree.

First of all, I would like to express my gratitude to my thesis supervisor Florian Noseleit, for his guidance and feedback during the thesis period. Furthermore, I would like to thank him for pushing me to search for a job while writing the thesis. During the period of writing my thesis I had several interviews and I can proudly say that I got a job offered before handing in my final thesis.

Secondly, I would like to thank my friends and girlfriend who had to listen to my brainstorm sessions about this thesis and for encouraging me to finish this final study project. Most of all I would like to thank everyone for proofreading and giving comments on the draft versions of thesis so that eventually I was able to hand in this project.

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7. References

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Entrepreneurship, 12(4), 64-80.

Andersson, P. (2008). Happiness and health: Well-being among the self-employed. The Journal of

Socio-Economics, 37(1), 213-236.

Benavides, F. G., Benach, J., Diez-Roux, A. V., & Roman, C. (2000). How do types of employment relate to health indicators? Findings from the Second European Survey on Working Conditions. Journal of

Epidemiology & Community Health, 54(7), 494-501.

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The impact of self-employment on subjective well-being in Europe