Appendix.

Part of the preceding analysis is based on survey data from the European Community Household Panel (ECHP)--a comprehensive European panel study that at present contains eight waves covering the period 1994-2001. The data is provided by Eurostat and based on interviews with households. The questions in the survey cover: demographics, (un)employment issues, income, training, education and social benefits.

There are two desirable features of the data: (1) it is possible to undertake a direct comparison across countries, as the same questionnaire is used in all countries, and (2) we are able to track individuals over time, as the data has a true panel structure. Hence, it is possible to identify transitions between different labor market states and compare these across countries.

In our analyzes, we exclude economically inactive individuals, such as students, retired persons, and individuals doing housework, community work or military service, as well as unpaid family workers. We focus on individuals aged 25-60 to minimize national effects of education and early retirement schemes. As in most empirical work, we exclude the agricultural sector because employment in this sector may be distorted by subsidies.

A.1 Self-Employment Rates

The raw self-employment rate is calculated as the share of self-employed relative to the labor force.

The high-skilled self-employment rate is calculated as the share of self-employed with higher education relative to the labor force. High-skilled individuals are defined as those with tertiary education corresponding to ISCED 5-7. The labor force is in this case restricted to contain only individuals with an observed educational category. Furthermore, we exclude the Netherlands due to errors in the reported education levels.

When calculating sector specific self-employment rates, we restrict the labor force to self-employed and wage workers only, as unemployed individuals are not affiliated with a sector. Individuals with no sector information or working in public sectors like public administration, education, health, and social work are dropped. High-skilled sectors are identified as the most skill-intensive sectors across EU-15, where each sector's skill intensity is normalized by the national skill level in order to control for different educational levels across countries.

A.2 Flow Measures

The entry (exit) rate is calculated as the ratio of individuals entering (exiting) self-employment relative to either the stock of self-employment in the previous period, or the entire population. The agricultural sector and individuals with no information regarding last period's employment status are dropped. Sweden is excluded because of unreliable estimates caused by a large attrition in the database and the lack of retrospective variables. The high-skilled entry (exit) rate is defined as individuals with a tertiary education making a transition into (out of) self-employment relative to either the stock of self-employed in the previous period or the entire population.

Tables A.1, A.2, A.3, A.4, A.5 and A.6 contain detailed estimates of self-employment rates and entry/exit rates for the years 1994-2001 to supplement the numbers presented in the main text. Additional tables are available upon request from the authors.

Jens Iversen (1), Rasmus Jorgensen (2) and Nikolaj Malchow-Moller (3)

(1) Centre for Economic and Business Research (CEBR) and University of Aarhus, Denmark, jiv@cebr.dk

(2) Centre for Economic and Business Research (CEBR) and University of Copenhagen, Denmark

(3) Centre for Economic and Business Research (CEBR) and University of Southern Denmark, Denmark Table A.1 Non-agricultural self-employment share of labor force (ECHP).

1994 1995 1996 1997 Austria -- 0.078 0.082 0.071

0.006 0.007 0.007 Belgium 0.111 0.118 0.111 0.115

0.006 0.006 0.006 0.007 Denmark 0.053 0.056 0.052 0.054

0.004 0.005 0.005 0.005 Finland -- -- 0.087 0.089

0.005 0.005 France 0.069 0.078 0.078 0.074

0.003 0.003 0.004 0.004 Germany * 0.064 0.064 0.067 --

0.004 0.004 0.004 Germany ** 0.074 0.082 0.090 0.090

0.005 0.006 0.006 0.006 Greece 0.287 0.276 0.270 0.264

0.008 0.008 0.008 0.008 Ireland 0.114 0.113 0.114 0.111

0.006 0.006 0.007 0.007 Italy 0.203 0.219 0.218 0.212

0.006 0.006 0.006 0.006 Luxembourg * 0.072 0.073 0.068 --

0.009 0.009 0.009 Luxembourg ** -- 0.085 0.073 0.071

0.006 0.006 0.006 Netherlands 0.042 0.044 0.049 0.050

0.003 0.003 0.004 0.004 Portugal 0.177 0.179 0.184 0.180

0.008 0.008 0.008 0.009 Spain 0.163 0.160 0.159 0.158

0.005 0.005 0.006 0.006 Sweden -- -- -- 0.101

0.006 UK * 0.136 0.140 0.141 --

0.005 0.006 0.007 UK ** 0.129 0.135 0.136 0.132

0.006 0.006 0.006 0.006

1998 1999 2000 2001 Austria 0.068 0.074 0.072 0.075

0.007 0.007 0.007 0.008 Belgium 0.110 0.118 0.116 0.104

0.007 0.008 0.008 0.008 Denmark 0.056 0.049 0.058 0.051

0.006 0.006 0.006 0.006 Finland 0.112 0.111 0.098 0.104

0.005 0.006 0.007 0.008 France 0.070 0.069 0.070 0.066

0.004 0.004 0.004 0.004 Germany * -- -- -- -- Germany ** 0.084 0.089 0.078 0.084

0.006 0.007 0.006 0.007 Greece 0.275 0.262 0.258 0.248

0.009 0.009 0.009 0.009 Ireland 0.106 0.107 0.099 0.090

0.007 0.009 0.009 0.009 Italy 0.208 0.209 0.209 0.209

0.006 0.006 0.007 0.007 Luxembourg * -- -- -- -- Luxembourg ** 0.067 0.063 0.063 0.061

0.006 0.006 0.006 0.006 Netherlands 0.048 0.053 0.052 0.055

0.004 0.004 0.004 0.004 Portugal 0.176 0.167 0.164 0.168

0.009 0.009 0.009 0.010 Spain 0.160 0.157 0.162 0.138

0.007 0.007 0.008 0.007 Sweden 0.099 0.098 0.095 0.099

0.006 0.006 0.006 0.006 UK * -- -- -- -- UK ** 0.119 0.118 0.112 0.119

0.006 0.006 0.006 0.006 Note: See Table 3.1. Robust Standard Errors in italics (estimated using sampling weights). * Original ECHP survey ** ECHP based on national survey. Table A.2 High-skilled self-employment rates.

1994 1995 1996 1997 Austria -- 0.012 0.008 0.009

0.002 0.002 0.002 Belgium 0.047 0.051 0.047 0.051

0.004 0.004 0.004 0.005 Denmark 0.017 0.019 0.017 0.019

0.002 0.003 0.003 0.003 Finland -- -- 0.028 0.028

0.003 0.003 France 0.020 0.022 0.023 0.022

0.002 0.002 0.002 0.002 Germany * 0.028 0.028 0.030 --

0.003 0.003 0.003 Germany ** 0.030 0.034 0.036 0.033

0.003 0.004 0.003 0.003 Greece 0.068 0.072 0.068 0.066

0.004 0.005 0.005 0.005 Ireland 0.025 0.026 0.028 0.026

0.003 0.004 0.004 0.004 Italy 0.021 0.021 0.023 0.022

0.002 0.002 0.002 0.002 Luxembourg * 0.036 0.037 0.029 --

0.006 0.007 0.006 Luxembourg ** -- 0.027 0.017 0.020

0.004 0.003 0.003 Netherlands 0.013 0.014 0.017 0.016

0.002 0.002 0.002 0.002 Portugal 0.013 0.014 0.012 0.015

0.003 0.003 0.003 0.003 Spain 0.029 0.030 0.030 0.034

0.002 0.003 0.003 0.003 Sweden -- -- -- 0.028

0.003 UK * 0.036 0.039 0.044 --

0.003 0.003 0.004 UK ** 0.049 0.053 0.053 0.054

0.004 0.004 0.004 0.004

1998 1999 2000 2001 Austria 0.008 0.009 0.011 0.015

0.002 0.002 0.003 0.003 Belgium 0.056 0.060 0.062 0.058

0.005 0.006 0.006 0.006 Denmark 0.016 0.013 0.019 0.018

0.003 0.002 0.003 0.003 Finland 0.028 0.029 0.027 0.028

0.003 0.003 0.003 0.004 France 0.021 0.020 0.021 0.020

0.002 0.002 0.002 0.002 Germany * -- -- -- -- Germany ** 0.034 0.035 0.030 0.035