Self-employment in Brazil and its determinants: a spatial analysis

In this paper, we intend to identify some factors underlying the different rates of participation of self-employed workers in Brazilian municipalities. In contrast with previous analysis, our study is sensitive to the spatial dimension of self-employment in Brazil. Relying on geo-referenced data from areal units, our approach avoids the restrictive assumptions of independence between area effects. Two different approaches to spatial analysis are exploited, Exploratory Spatial Data Analysis (ESDA) and Spatial Econometrics. We show that substantial geographical heterogeneity in rates of self-employment exists within Brazil. The results point to the presence of clusters of municipalities with similar rates of participation of self-employment in the economy. The fitting of a spatial lag model to the data demonstrates that significant part of variation in self-employment is explained by spatial dependence. In addition, the municipality's degree of urbanization, rate of employment in the secondary sector as well as GDP per capita among others, indeed influences its rate of self-employment. We conclude that spatial analysis can provide useful insights in analyzing self-employment in Brazil.