Living in rural areas and self-employment

Are workers in rural areas more likely to be self-employed compared to those in urban areas? Are their employment outcomes better than their counterparts in rural areas? To answer these questions, this paper uses data from the European Working Conditions Survey for the year 2015, encompassing 35 European countries. Results reveal that individuals in rural areas exhibit a higher likelihood of being self-employed, compared to their urban counterparts. However, self-employed workers in rural areas experience significantly worse employment outcomes than their urban counterparts, as they receive lower earnings. Despite the more demanding working conditions, workers in rural Europe are more inclined towards self-employment as a mean of livelihood. These findings suggest that self-employment serves as a crucial mechanism for individuals in rural areas to cope with developmental and institutional challenges, and highlight the importance of regional supportive self-employment policies.