SOTA Review

Self-employment and Local Growth.

ERC SOTA Review No 23

Associated Themes
  • Business Growth

Rapid growth in self-employment in some economies, of which the UK is a notable example, has raised the salience of whether growing self-employment (SE) contributes to economic growth and regional development (RD). The UK experience is that self-employment growth is not spatially uniform (Henley, 2017), and so this question is often framed in terms of local economic benefits. While researchers typically argue that SE is an indicator of entrepreneurialism, higher SE also raises concerns about the growth of employment casualization and the gig economy (Taylor, 2017). Nevertheless, more prosperous locations, such as in and around London, appear to experience stronger local SE activity. The key research issue here concerns whether this self-employment, through its impact on entrepreneurial dynamism, causes improvements in RD, or is merely a reflection of it.

This review places this question in its wider context and reviews the relatively limited range of extant analysis on the SE-RD nexus. The findings from this literature are, prima facie, consistent and supportive of a positive link. However, the review identifies a number of concerns, both conceptual and empirical, and in doing so highlights gaps in the available evidence base.