Testing the 'residential rootedness'-hypothesis of self-employment for Germany and the UK

Abstract

Based on the notion that entrepreneurship is a ‘local event’, the literature argues that self-employed workers and entrepreneurs are ‘rooted’ in place. This paper tests the ‘residential rootedness’‒hypothesis of self-employment by examining for Germany and the UK whether the self-employed are less likely to move or migrate than employees. Using longitudinal data from the German Socio-economic Panel Study (SOEP) and the British Household Panel Survey (BHPS) and accounting for transitions in employment status we found little evidence that the self-employed in Germany and the UK are more rooted in place than employees. Firstly, the self-employed are not less likely to move or migrate over the period 2001–08. Secondly, those who are currently self-employed are also not more likely to have remained in the same place over a period of three years (2008–06 and 2005–03) as compared to those who are currently employed. Thirdly, those who are continuously self-employed are not less likely to have moved or migrated over a 3-period than those in continuous paid employment. Fourthly, in contrast to the prevalent ‘residential rootedness’‒hypothesis in economic geography and regional studies, we found that the entry into and the exit from self-employment are associated with internal migration.