Summary

Self-employment and entrepreneurship are important economic phenomena. Self-employment is widespread throughout the world and small firms are the principal vehicles for the organisation of production. Far from self-employment being an occupation in irrevocable decline, the evidence outlined in chapter 1 showed that numbers of self-employed people are holding up strongly in many countries. While it is true that declining transportation and communications costs, more capital-intensive methods of production, and industry consolidation do not favour many small-scale enterprises (White, 1984), these changes may be less pervasive in many service industries. And some of these changes might be amenable to exploitation by entrepreneurs who can discern in them profitable opportunities.

Our review of the theories and evidence about entrepreneurship in chapters 2 and 3 revealed that economists regard entrepreneurial ability and willingness to take risks as key factors determining who becomes an entrepreneur. While more work remains to be done on estimating structural models to identify the empirical importance of these factors, we now know a fair amount about the specific characteristics of entrepreneurs. They often come from families with a tradition of self-employment or business ownership; they are on average older, reasonably well educated and more likely to be married, and are generally over-optimistic about their prospects of success. On the balance of evidence, non-pecuniary factors appear to be more important than pecuniary factors in explaining why people choose to be entrepreneurs.

Self-employed people in most OECD countries tend to be predominantly white, male and middle aged.