The Decline of the Self-Employment Rate in Australia

Abstract

This paper using the Australian panel data(HILDA) investigates the declining trend of self-employment rate in Australia, a pattern observed in a number of other developed countries in the 2000s. We focus on the entry into and the exit from self-employment, treating males and females separately. Our results show that the self-employment rate has declined in Australia because older workers, especially older female workers, remained longer in paid-employment. This finding indicates that although the self-employment rate of older workers is higher than that of younger workers, the gap has decreased in recent years so that the average self-employment rate has declined. In addition, we provide some evidence that industry and institutional changes, such as reforms in tax and pension systems, may have contributed to an increase in the labour force participation of older females, which may explain why the decline of self-employment has been severe for this group.