The impact of financial openness on the earnings of self-employed workers - an empirical evidence from a panel dataset

Le Thi Thu Huong1,, Bui Thi Ly2, Nguyen Huyen Minh2
1 Colorado State University, Fort Collins, USA
2 Foreign Trade University, Hanoi, Vietnam

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This paper contributes to the literature on the effect of financial openness by investigating the factors and determinants which drive the income share to self-employed labor during financial liberalization. The question of the precise impact of liberalization on the share of the self-employed has received less attention in the literature. The authors use a de jure or a rule-based indicator as a measure of capital account openness. The empirical work is applied for a panel dataset of 30 countries during the period of 1970 - 2015. The results from all specifications support the hypothesis that financial integration leads to an increase in the unemployment rate as well as in the income share of self-employed. Nevertheless, the positive relation between financial openness and self-employed income is not evident when we focus solely on developed countries.

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