2004
Volume 27, Issue 3
  • ISSN: 0169-2216
  • E-ISSN: 2468-9424

Abstract

Measuring the benefits and costs of self-employment

Measuring the benefits and costs of self-employment

Freelancers are cherished for adding an entrepreneurial attitude to the labor market. Yet they are criticized for undermining the Dutch polder model, with its collective system of pension savings and social insurance. We present a financial trade off, weighing the advantages and disadvantages of freelancers in a cost-benefit analysis related approach. We compare total welfare in a real world with freelancers and a virtual world without freelancers, in the context of two relevant industries: construction and ICT. As input for the analysis we use the number of employers, freelance workers and regular employees, mean productivity and payment levels of these groups, fiscal facilities for employers and self-employed, the use and costs of alternative savings and insurance schemes, etc.The main contribution of freelancers to the labor market is flexibility for the firms that make use of their services. Freelancers carry a part of the risk of these firms, and get compensated for that. The effects of a higher productivity and a more innovative attitude hardly play a role. The added value of freelancers is a better working labor market. Freelancers are self-employed risk-bearers, but they are not entrepreneurs.

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/content/journals/10.5117/2011.027.003.306
2011-09-01
2022-11-30
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