SELF-EMPLOYMENT AND JOB CREATION IN THE EU-12

This paper examines the co-movement and causality between self-employment and paid-employment cycles in the EU-12 countries using annual data spanning the years 1983 to 2008. Using different strategies, the causality and correlations at different horizons are used to analyze the dynamics in the paid-employment-self-employment relationship. The paper touches a "hot topic", since the high European unemployment rate and the ineffectiveness showed by traditional active labour markets policies, have lead in a renewed interest in the promotion of new start-ups as a way of contributing to job creation. In that sense, this article provides some useful guidelines for devising and implementing this policy.