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Self-employment increases when wages are up, new study shows

Paystream News

Paystream

Thursday 28th May, 2015

A new study has revealed a link between self-employment levels and wages in parts of the UK. 

Research undertaken by the universities of Sussex and Sheffield found that entrepreneurship tends to be more common in areas that are economically successful and people earn higher wages. 

It was revealed that self-employment and limited company working increased from six per cent to around 13 per cent between 1971 and 2011, but there were considerable regional variations across the nation.

David Storey, professor of enterprise at the University of Sussex and co-author of the research, stated: "Governments have used public money to raise rates in low-enterprise areas in the belief that this would lead to wealth and job creation, but it hasn’t happened. 

"Instead, entrepreneurial activity has changed in line with the economic prosperity of the area. This seems to suggest that entrepreneurship is a response to, rather than a cause of, wealth creation."

All areas of London were found to have experienced a rise in self-employment and entrepreneurship in the 40-year study period, while coastal towns such as Blackpool and Bournemouth saw a fall. 

The study also looked into the relationship between immigration and self-employment. In both 1971 and 1981, areas with higher numbers of migrants were found to have fewer entrepreneurs. However, in 1991, 2001 and 2011 immigrants were more likely to live in areas with a high level of self-employment.

Professor Storey said these figures indicate that the people coming to live in the UK are increasingly favouring entrepreneurship as a means of engagement. The research also revealed parts of the country where the number of people aged between 55 and 64 is growing are likely to see an increase in self-employment.