Technological progress and the dynamics of self-employment: Worker-level evidence for Europe

In this article, we examine how technology is associated with self-employment dynamics using worker-level data from 30 European countries. We find that, while employees exposed to labour-augmenting technologies are more likely to move from paid employment to solo self-employment and vice-versa, employees exposed to labour-saving technologies are less likely to become self-employed. We identify important differences with respect to workers’ socio-demographic characteristics. The results suggest that, while labour-augmenting technologies promote workers’ mobility and reduce the risk of unemployment for high-skilled workers, they have the opposite effect for low-skilled workers. Furthermore, labour-saving technologies worsen labour market outcomes particularly for low-skilled and routine workers.