Factors Affecting the Choice of the Self-employed Status: the Role of Regional Characteristics

This paper estimates the effect of regional characteristics as well as individual ones on the decision to become a self-employed individual using the probit model. During the research conducted, there was found that various regional factors influence the decision-making process on the labour market of the Russian Federation. However, the effect of individual characteristics is stronger in comparison to the regional ones. The results remain significant even when further regional controls are added such as the socio-economic index of the development of Russian regions and the level of digitalization. This study makes a significant contribution to the existing literature on labour economics by means of an empirical analysis of the influence of the degree of regional development on the decision to be undertaken by an individual in the Russian labour market. The results of the paper provide important implications for employees, employers and policymakers that create strategies upon the development of self- employment, help to overcome misunderstanding across variations in regional self- employment rates.