Eastward enlargements of the European Union, transitional arrangements and self-employment

• Published in: Journal of population economics Vol. 36; no. 2; pp. 719 - 742
• Main Authors: Ulceluse, Magdalena, Kahanec, Martin
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer Berlin Heidelberg 01-04-2023; Springer Nature B.V
• Subjects: Accession; Arrangements; Demography; Economics; Economics and Finance; Employment; Labor contracts; Labor Economics; Labor force; Labor market; Migration; Original Paper; Population Economics; Self employment; Social Policy; Self-employment; J18; EU enlargement; Transitional arrangements; Migration; J10; J15
• ISSN: 0933-1433; 1432-1475; 1432-1475
• DOI: 10.1007/s00148-022-00904-2

When the European Union expanded eastward in 2004 and 2007 to accession the so-called EU8 and EU2 countries, respectively, the incumbent member states imposed temporary restrictions on the employment of EU8 and EU2 nationals. Self-employed individuals were exempted from these transitional arrangements, prompting concerns that self-employment could be used as a means to evade the restrictions on labour market access. If the transitional arrangements led to an increase in EU8 and EU2 nationals’ self-employment rates, as previous research suggests, then their removal should have led to a corresponding decrease. This article analyses whether the latter has indeed been the case. Using pooled cross section data from the EU Labour Force Survey, over the period 2004–2019, we show that removing the transitional arrangements has had a negative effect on the self-employment rates of EU2 nationals, but seemingly no effect on the self-employment rates of EU8 nationals. Distinguishing between types of capitalist regimes, however, reveals a much more nuanced picture, with significant variation in terms of the magnitude and significance of the effect across groups of countries.