A Changing Labor Market? The Importance of Wageworkers with Self-employment Activities

Over the past decade, it has been argued that the standard employer-employee model of formal, full-time and permanent wage employment is becoming increasingly less common. In this paper, we examine whether the Danish labor market is shifting towards an arrangement in which individuals receive part of their income from both wage work and self-employment activities. We use data from the entire population of sole proprietorships in Denmark linked to registerbased information on firm sales and on owners’ employment status and income. We find a shift in the number of sole proprietorships towards firms with limited activity. However, fewer than 45 percent of wageworkers who own a sole proprietorship actually receive income from self-employment activities, and only 60 percent of the sole proprietorships with limited activity have any sales. Our results suggest that “false self-employment” is not prevalent in the Danish labor market.