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Labour Market and Self-Employment: The Israeli Case

Abstract The aim of this paper is to present and analyze the labour market from the perspective of self-employment. It investigates the phenomenon of this form of employment from several aspects: on the one hand, it examines the factors influencing the choice of Israelis to be self-employed among Arabs and Jews in Israel, and, on the other hand, it examines the extent to which human capital and family background characteristics determine the employment choice. The main aim of the paper is to characterize the phenomenon of self-employment in the labour market. By using 2008 data Israel Census, hypotheses concerning the effect of demographical variables on self-employment are formulated and tested, using logistic regression. The results support the research hypotheses, and the most notable predictors of self-employment are discussed. Thus, we conclude that family background, gender, age, number of children and an interaction between nationality and occupation are the most significant predictors of self-employment. Many factors affect the self-employment status of citizens of Israel, with the single strongest predictor being gender – males in Israel are more likely to be self-employed. Also, more urbanized areas such as Tel-Aviv and the Centre, have higher self-employment rate than less populated areas such as the South.