The transition to self-employment and perceived skill-mismatches: panel data evidence from eleven EU countries

Some studies using either objective or subjective indicators, find that self-employed individuals are less likely to be or to report being skill-mismatched in comparison with salaried employees. The aim of this paper is to analyze the impact of the transition from salaried employment to self-employment on self-reported skill mismatches. To do so, this article uses eight waves of the European Community Household Panel covering the period 1994-2001. The panel data nature of this rich dataset, allows us to track individuals over time and measure self-reported skill-mismatches before and after the transition for the same individuals, using as the comparison group those individu-als who remain in salaried employment during the whole sample period. Our empirical findings indicate that those individuals who transit from salaried employment to self-employment reduce their probability to report being skill-mismatched after the transition. Interestingly, we also observe that this effect vanish if the transition is done from an unemployment status, and that the effect is quite heterogenous across countries.