Economic cycles and self-employment: Synthetic Cohort Analysis for Greater Santiago*

Abstract

Economic cycles affect both unemployment and the composition of employment, which can have an impact on the well-being of individuals if these changes in composition are involuntary or involve a decrease in the quality of employ-ment. In this article, we study the relationship between economic cycles and self-employment, distinguishing between employers and own-account workers, through a synthetic cohort methodology using data for Chile. The results suggest that the proportion of employers is procyclical and that of own-account workers is countercyclical. This suggests that own-account employment is a refuge in times of crisis from the shortage of wage-based employment. This highlights the importance of designing public policies that would improve the conditions of self-employed workers. © 2022, Universidad de Chile. All rights reserved.