Recent Developments in Self-Employment in Canada

The authors document the recent evolution of the self-employment rate in Canada. Between 1987 and 1998, the self-employment rate rose 3.5 percentage points from 13.8 per cent to 17.3 per cent. In contrast, over the 1999 to 2002 period, the self-employment rate fell by 1.9 percentage points, returning the self-employment rate in 2002 to a level only 0.2 percentage points higher than in 1992. The authors explore the possible explanations for this reversal. They describe trends in self-employment by age, gender, and types of self-employment, and then decompose the changes in the self-employment rate into the fraction due to shifts in the industrial structure and the proportion due to changes within each industry. The authors also examine the role of the business cycle and other macroeconomic factors, such as tax rates.