essay about self employment

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557 words essay on Self-employment

Free sample essay on Self-employment. Self-employment has acquired much significance these days as employment opportunities for youths are less nowadays. Even highly qualified youths do not get the jobs they deserve.

This is because the number of educated youths is increasing year by year, but the job opportunities remain more or less the same or they may be a little more than in the last year. The craze for degrees in the Engineering science and Medicine is increasing and it is not possible for the Government and the private institutions to give jobs to the ever-increasing number of engineering and medical graduates and graduates and postgraduates in other subjects. In this situation those who have good educational qualification should think of self-employment.

Banks give loans to the educated youths to start businesses. Engineering graduates can start small factories to manufacture some products. They can serve as contractors for certain products to the Railway Department, to the State Transport Department, to the Electricity Department etc. Ordinary graduates can set up shops dealing in books, fancy articles or some other products. Some youths can join together and start a cooperative business which may manufacture and sell cold drinks, different kinds of oil, textiles etc. There are Government institutes which train the aspiring persons in the manufacture of plastic goods, electrical gadgets, candles etc. Youths may undergo training in these institutes.

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It is important that in the context of no availability of jobs in the Government departments and in the private institutions the educated youth should think of self-employment.

Self-help groups are fast coming up in several areas with the support of finance from banks. It was shown on the TV that a whole village in south India is engaged in the bakery business. The villagers have joined together and make bread, biscuit, different kinds of cake, puffs etc. Some groups undertake the sale of their products through shops and cooperative societies. This is a wonderful story of cooperation among the villagers and they should have thought about their business and should have crossed many hurdles in the implementation of their programme. This is a model village and other villages can follow it.

In the North Arco district in south India there is a village called China Pallikkuppam. Many women in the village were employed in the quarries as bonded labourers. Among these women some came out with the idea of starting their own business and they began working at it. The self-help group started the stone-quarrying business with a piece of land allotted by the Government. It made profit soon and the loan they got from the State Bank of India was repaid in regular installments. The business is growing from strength to strength and the women work with a sense of freedom and earn well. They say that they will educate their children well and open up a new chapter in their families.

Those who are unemployed should not get dispirited when they have no job but should think of becoming entrepreneurs. In the initial stage, in a business, there may be some problems which should be overcome resolutely. There are stories and stories of prosperous businessmen and industrialists who have come up from scratch. There are successful businessmen who have switched over from business to business and who have finally found the business most suitable to them and profitable. Efforts never fail.

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IELTS Model Essay: Self Employment

This week’s IELTS model essay is one of my favourite tasks! It’s on the topic of self employment:

Nowadays many people choose to be self-employed, rather than to work for a company or organisation. Why might this be the case? What could be the disadvantages of being self-employed?

Cambridge IELTS Academic 14 Test 4

In effect, this is an ‘advantages – disadvantages’ essay in disguise! The first question ‘why might be the case’ is really asking you for the advantages of self-employment. People choose to be self-employed because there are advantages.

So I think the question could be worded like this:

Nowadays many people choose to be self-employed, rather than to work for a company or organisation. What could be the advantages and disadvantages of being self-employed?

If you find it difficult to generate ideas for this task , you can simply search online for “advantages and disadvantages of self employment”. You will get lots of ideas! Here are some interesting articles:

• https://www.nutcache.com/blog/self-employed-worker-advantages-disadvantages/
• https://freelancinghacks.com/advantages-and-disadvantages-of-being-self-employed/

It’s probably a good idea to include some comparisons between self-employment and working for a company, because the topic isn’t only about self-employment: it includes the phrase “ rather than to work for a company or organisation” . So some comparative language is useful, and will increase your range of vocabulary too.

Reasons why (advantages)

Potentially higher earnings

• may only get a small annual pay increase
• self-employment: working harder can mean big financial rewards
• don’t have to do what your boss tells you to do
• e.g. make your own decisions
• more flexibility with working hours / work

Disadvantages

Greater risk

• no guaranteed income in self employment
• employed people get regular pay
• problem if you have mortgage
• difficult to take holidays, may have to work weekends / evenings
• working for someone else usually has fixed hours, finish by 5pm

This essay is quite long, so I decided to split my essay into four body paragraphs . This will make it easier for my reader to see the structure of my essay.

There seems to be a growing trend of people around the world choosing to be self-employed rather than to work for a company. This essay will consider the reasons for this as well as the drawbacks of working for yourself.

One of the main attractions of self-employment is the opportunity for higher earnings than you might receive when working for a company. In the latter, salaries are determined by your boss and increases are often limited, regardless of how hard you work. If you work hard as a self-employed person, the financial rewards are potentially unlimited, especially with online businesses. For example, using social media advertising can allow a solopreneur to rapidly increase sales.

But money is, for many people, not the main incentive of working for oneself. Instead, it’s the sense of autonomy you receive. You no longer have to do what your line manager tells you to do; instead, you can make your own decisions. This allows you to enjoy greater flexibility over things like working hours and the kind of work you do.

However, there are drawbacks to self employment. Firstly, there might be considerable financial risk. There is no guarantee of income, unlike those who receive regular pay cheques from their boss, and it’s not unusual to see new small businesses fail due to a lack of money. This is quite daunting for people who have regular expenses such as a mortgage, and so many people prefer the safety afforded to them by working for someone else.

Additionally, working for yourself will usually entail working long hours, sometimes at weekends and in the evening, leaving little time for the kind of recreation time enjoyed by workers who simply stop work at around 5pm. Furthermore, it may be difficult to take holidays if you work for yourself, so the work-life balance for self-employed people can be a problem.

In short, self-employment isn’t for everyone. There are clear drawbacks related to money and time, but for many people, the attraction of greater success and satisfaction is worth the risk.

(341 words)

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16 Advantages and Disadvantages of Self-Employment

Self-employment has become increasingly popular in recent times, as more people are choosing to become self-employed and work for themselves.

This article will explore the many advantages and disadvantages of self-employment, and shed light on what it means to be self-employed.

• Redaction Team
• September 22, 2023
• Entrepreneurial Ecosystem , Entrepreneurship

Advantages of Self-Employment

• Autonomy and Control : Self-employed individuals have full control over their work, including the ability to make decisions about the business, its direction, and how work is performed.
• Flexibility : Self-employment often allows for greater flexibility in terms of work hours and location. You can set your own schedule and work from home or other preferred locations.
• Income Potential : Self-employed individuals have the potential to earn more money, as they can directly benefit from their efforts, expertise, and business growth.
• Variety of Work : Many self-employed people have the opportunity to work on diverse projects, which can keep the work interesting and challenging.
• Tax Benefits : Self-employed individuals may have access to tax benefits and deductions that are not available to traditional employees, potentially reducing their overall tax liability.
• Personal Fulfillment : Self-employment allows individuals to pursue their passions and interests, which can lead to greater personal fulfillment and satisfaction with their work.
• Creativity : Entrepreneurs and freelancers often have the freedom to be creative and innovative in their work, developing unique products or services.
• Building Equity : If you own a business, you have the opportunity to build equity in your company, which can be a valuable asset over time.

Disadvantages of Self-Employment

• Financial Risk : Self-employment can be financially risky, as income can be irregular and unpredictable. There may also be significant upfront costs to start a business.
• Lack of Benefits : Unlike traditional employees, self-employed individuals typically do not receive benefits such as health insurance, retirement plans, or paid time off unless they arrange for these independently.
• Administrative Burden : Self-employment often involves administrative tasks like bookkeeping, tax filing, and business management, which can be time-consuming and challenging.
• Isolation : Working independently can lead to feelings of isolation and loneliness, especially for those who miss the social interaction found in traditional workplaces.
• Inconsistent Income : The income of self-employed individuals can vary greatly from month to month or year to year, making it difficult to budget and plan for the future.
• Lack of Job Security : Self-employed individuals do not have the job security that comes with traditional employment, as they are dependent on their ability to generate income.
• Limited Benefits : Access to benefits like health insurance and retirement plans may be more expensive and limited for self-employed individuals compared to those offered by employers.
• Work-Life Balance : Achieving a work-life balance can be challenging for self-employed individuals, as they may find it difficult to switch off from work or set clear boundaries.

Advantages of Being Self-Employed

One of the biggest advantages of self-employment is the freedom it provides. When you are self-employed, you have the autonomy to make your own decisions and chart your own course. You are the business owner, and you have the final say in everything. This level of control and independence can be incredibly empowering.

Another benefit of self-employment is the flexibility it offers. Most self-employed individuals have the option to work from home or set their own working hours. This means you can create a schedule that suits your lifestyle and enables you to work when you are most productive. Whether you are a morning person or a night owl, being self-employed allows you to work at your own pace.

In addition to flexibility, self-employment can also provide job satisfaction. When you are self-employed, you have the opportunity to work on projects that truly interest you and align with your passions. You are not bound by the demands of a traditional 9-to-5 job and can pursue work that fulfills you on a deeper level.

Self-employment also allows you to take advantage of various tax deductions and benefits. As a self-employed worker, you can deduct business expenses such as office supplies, equipment, and even a portion of your home if you have a dedicated workspace. These deductions can significantly reduce your tax burden and ultimately save you money.

Disadvantages of Being Self-Employed

While there are many advantages to self-employment, it is important to acknowledge the disadvantages as well. One of the main challenges faced by self-employed individuals is the long hours they often have to work. When you are your own boss, there is no set schedule or clocking out at the end of the day. You are responsible for the success of your business, which often requires putting in extra hours.

Another disadvantage of self-employment is the lack of stability and security compared to being a salaried employee. As a self-employed individual, your income can fluctuate greatly from month to month, and there is no guarantee of a steady paycheck. This uncertainty can be stressful and requires careful financial planning and budgeting.

Self-employment also requires a certain level of entrepreneurial spirit and business acumen. You need to have a solid business plan in place and understand how to market your services effectively. Without these skills, it can be challenging to attract clients and generate consistent income.

It is also worth mentioning that self-employment can be isolating, especially for freelancers who work alone. The lack of social interaction and camaraderie that comes with being part of a team can be a lonely experience for some individuals.

Conclusion of Advantages and Disadvantages of Self Employment

In conclusion, self-employment offers numerous advantages and disadvantages. It provides freedom, flexibility, and the ability to work on projects that you are truly passionate about. However, it also requires hard work, long hours, and financial uncertainty. Before deciding to become self-employed, it is important to carefully consider these pros and cons and evaluate whether self-employment is the right path for you.

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Self-Employment: Definition, Types, and Benefits

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What Is Self-Employment?

• Understanding It

Special Considerations

• Pros and Cons

The Bottom Line

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Self-employment is earning income without being employed and paid by someone else. Self-employed persons may be involved in a variety of occupations but generally are highly skilled at a particular kind of work. Writers, tradespeople, freelancers , traders/investors, lawyers, salespeople, and insurance agents all may be self-employed. Self-employment isn't like being a traditional worker because self-employed individuals aren't tied to an employer. Being self-employed gives people flexibility but comes with certain tax implications.

Key Takeaways

• Self-employment allows people to work for themselves without being tied to an employer.
• Self-employed individuals are generally required to pay estimated taxes each quarter.
• Being self-employed can provide flexibility and autonomy, but there is a greater degree of employment risk and a cyclic or varying income.

Understanding Self-Employment

The precise definition of self-employment depends on who you ask, as it varies among different agencies, including the U.S. Bureau of Labor Statistics (BLS) , the Internal Revenue Service (IRS) , and private research firms. However, the overarching definition of the term is the state of earning a living from any independent pursuit of economic activity instead of earning a living working for a company or entity.

A self-employed person is anyone who performs work for pay, independent contractors, sole proprietors of businesses, and individuals engaged in partnerships . A freelancer or an independent contractor who performs all of their work for a single client may still be a self-employed person.

Being self-employed is often confused with owning a business, but the two concepts aren't necessarily the same. A self-employed person is usually the business itself, whereas a business owner may own the company but not be involved in operating or managing it.

A self-employed person must file annual taxes and pay an estimated quarterly tax . They are also required to pay what is called the self-employment tax in addition to income tax. This tax equals 15.3% of their earnings. Of this tax, 12.4% goes to Social Security on the first $168,600 in 2024, and 2.9% goes to Medicare tax.

Those who make less than an annual net profit of $400 are exempt from paying taxes on that income.

Advantages and Disadvantages of Self-Employment

There are benefits and drawbacks of working as a self-employed individual. We've highlighted some of the key pros and cons below.

While self-employment generally requires much more work and attention, many benefits are attractive:

You are the boss

• You have the luxury of deciding what projects you work on
• You work the hours you want, which gives you the freedom to take time off and work whenever you want
• You can specialize in work you enjoy rather than working for pay doing something you may not like

Disadvantages

One of the most significant disadvantages of self-employment is that there is no entity withholding and paying your estimated taxes or withholding —you're required to pay estimated federal taxes quarterly. Some other disadvantages are:

• There are no paid days off or paid vacation time, so a day off is a day without pay
• You are responsible for your own health insurance and retirement benefits
• You must ensure you remain profitable and busy, finding work for yourself
• You must ensure you abide by the tax laws, filing requirements, and any applicable fees in your state and county

Ability to choose projects

Flexibility in your schedule

Do what you enjoy

No paid days off

No benefits

Work may come and go

You are liable for your own taxes

Types of Self-Employment

Independent contractors  are businesses or individuals hired to do specific jobs. They receive payment only for the jobs that they do. Because they are not considered employees, they do not receive benefits or workers’ compensation , their clients do not withhold taxes from their payments for work performed, and equal opportunity laws do not apply to them.

Examples of independent contractors include doctors, journalists, freelance workers, lawyers, actors, and accountants who are in business for themselves. It is worth noting that independent contractors are not just limited to specialized fields and can include various jobs.

Sole proprietors are the only owners of unincorporated businesses, while partnerships involve two or more self-employed people who form a business together. Independent contractors, sole proprietors, and partnerships often hire a few employees to help them with their work.

10.11 million

The number of self-employed and unincorporated individuals in the U.S. as of March 2024.

It is estimated that freelancers, particularly in what is known as the gig economy , will continue to grow. There were approximately 67.6 million freelancers in 2021, which is expected to grow to 86.5 million by 2027. It is expected that 50.9% of the workforce will be freelancers by 2027.

What Are the Main Types of Self-Employment?

The main types of self-employment types are independent contractor, which is an individual working a specific job; a sole proprietorship, which is a business enterprise run by an individual and which may or may not have additional employees; and a partnership, which is a business structure between two or more individuals with ownership status.

How Do You Show Proof of Income If You Are Self-Employed?

Proof of income may be required in various instances, such as filing taxes, obtaining a mortgage or other loan, or purchasing health insurance. Ways to show proof of income if you are self-employed include tax returns, Form 1099, bank statements (both personal and of the business account), audited profit and loss statements, and official invoices.

What Are the Benefits of Being Self-Employed?

The benefits of being self-employed include being your own boss, creating your own schedule, flexibility, working towards your dreams, enjoying the challenges of starting something from scratch, choosing the people you work with, and creating your own work environment.

A self-employed person isn't tied to a specific employer. They more or less decide when they'll work and when they won't. As such, a self-employed person is their own boss, which comes with certain tax liabilities. This includes paying the employee and employer portions of Social Security and Medicare taxes as well as periodic income tax payments. They must also foot the bill for supplies, equipment, and office space. Although it may sound tempting, it's important to consider the benefits and disadvantages carefully if you're considering going out independently as a self-employed person.

Internal Revenue Service. " Self-Employed Individuals Tax Center ."

Social Security Administration. " How Is Social Security Financed? "

Internal Revenue Service. " Self-Employment Tax (Social Security and Medicare Taxes) ."

U.S. Equal Employment Opportunity Commission. " Coverage: Deciding Who Is Covered ."

Internal Revenue Service. " Sole Proprietorships ."

Internal Revenue Service. " Tax Information for Partnerships ."

U.S. Bureau of Labor Statistics. " The Employment Situation—March 2024 ." Page 20.

Statista. " Number of Freelancers in the United States From 2017 to 2028 ."

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Nine (9) Advantages And Disadvantages Of Being Self Employed

• Post author: Edeh Samuel Chukwuemeka ACMC
• Post published: March 7, 2024
• Post category: Financial Tips / Scholarly Articles

Advantages and Disadvantages Of Being Self Employed: Self employment could definitely be a profiting way to make a living, regardless of the fact that it could be tasking and a lot demanding as one get to handle or let every important decision about the business go through them, it could as well be profiting. When one is self employed, he or she is said to be their own boss as he does not answer to anyone with regards to his job.

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Table of Contents

Meaning of Employment

Employment means the state of having a job or the state in which a person is employed and in most cases, the job in question is a paid job. In its general sense is the relationship which exists between two individual, which most times, it’s on a term of contract where the work being done is paid for, the person who is an employer, pays the employee. However the mode of payment may come in different methods which could be in the form of monthly salary, annual salary, hourly or weekly wage.

Meaning of Self Employment

To be self employed, one has to work solely as a sole proprietor or contractor, the person need not necessarily work alone as he would have others working under him, rather he would be the sole owner of the business. Instead of working in a company or establishment and being paid salaries, being self employed, offers one the opportunity of paying his own salary and also bearing any risk emanating from the business.

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Advantages (Merits) of Self Employment

Being self employed opens doors to many advantages which other form of business may deny.  These advantages are :

1. Being Self employed puts you in Control: It’s no doubt that humans love being in control, therefore being self employed offers us the opportunity to be in control. Being self employed provides you with absolute opportunity to be in control in every aspect of the business, it allows you to structure the work environment you wish to have. Instead of following rules or having some rules being forced down on you against your wish, you get to make your own rules.

2. Creates an opportunity to be more passionate about what you do : The magic of self employment is that it allows you to engage in work which interests you, you get to do what you love doing and not what another wants you to do. Instead of presenting your idea to an employer who has no interest in your them and have he or she turn it down, you get to pitch the idea to yourself and execute it the way you please.

Also see: How to start a business with small capital and be successful

3. Work schedule : Isn’t it fun that you get to create your own work schedule; you get to decide where or when not to work, you get to work at your own pace? Being self employed helps grants you the opportunity to create your work schedule, however, while starting the business, the schedule would be a though one as one would get to work many hours and sometimes weekend all in the bid to build the business but once the business is strong enough, there would be stability which would allow you create a stable work schedule.

4. Team Meetings : In our respective work place, we get to endure sitting through unproductive hours of team meeting, we get to listen to our boss and co workers waste the time which if put into work would have increased productivity, but here we are, listening to long chatters as time goes by.

Being self employed would avoid this time killer as you get to plan about the business yourself, allocating time to yourself while doing it in other to be more efficient.

Also see: Most profitable skills to learn in 2022

5. Control over time management : Independent time as a person who is self employed means that you have more control over your how you spend your time which gives you more control over time management. You get to fix your schedule into allowing you to do other things like; going for the book club meetings, going to the gym and the rest of the extra work activity you wish to do.

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6. You choose your coworkers: Throughout your career as an employee, you will work with both those you like and those you despise the most. You are not given the option to pick your coworkers as an employee. It’s difficult if you don’t like your coworkers.

However, when you run your own business, that is not the case. You get to decide who to hire and fire, and you can assemble a team that complements your personality and objectives.

Also see: Most Fun Jobs In The World

7. You determine your work environment: The benefit of being self-employed is that you can work wherever you want. You could either choose to work from home or locate a professional office space.

Another option is to set up your company so that you can work remotely. For those who want to travel frequently without it affecting their jobs, this option is particularly appealing.

Also see: Differences Between A Barrister And a Lawyer

8. You get the potential financial rewards: Yes, as an employee, you will be compensated for working extra hours. But you’ll rarely receive a cut of the money made from that work.

In contrast, when you work for yourself, you get to see the financial benefits of your labor. Yes, there is always risk involved in starting a business, but if you do it right, the benefits far outweigh the risks.

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9. No Dress code: One benefit of working as a freelancer is that you don’t have to dress in a suit and tie. The same is true for women who work. If you don’t like wearing formal attire, you’d be content to work from home in your jammies or from a different location while wearing colourful clothes that express who you are.

Only when you are attending a meeting with your clients would you need to be dressed as a corporate employee.

Also see: Best online universities to attend in the world

Disadvantages (Demerits) of Self Employment

1. Paying more taxes : If you a self employed, you would realize that all that glitters are not really gold. This is in the sense that being self employed comes at a price. When it comes to paying bills, especially taxes, you would have to bare it alone. You pay more taxes as an employer than an employee, and no one would come to your aid as all the risk is on the owner of the business.

2. No stable income : Yes, one would be able to save up money by just working for him but this does not guarantee a stable income. You would be bearing the entire risk of the business on your shoulder which would lead to spending more and sometimes earning less especially if it is a start up business.

Unless you have good financial stability before starting, the first few years of starting up a business would defiantly be fund consuming as lots and lots of expenses would be made.  Fortunately, you may be able to find customers and clients within a short period of time and this would help stabilize your income to a reasonable extent.

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3. There would be difficulty picking work : Being able to choose your own work schedule has been discussed in the advantages, however, this may be difficult to do as you may find it hard to settle for work at a particular time and not having to do other things.

One may find it difficult to establish a healthy boundary between their work schedule and their personal life. However, work may consume all the time one has, living him with little or no time for his personal life. Also at start ups, you don’t get to have paid leaves as you do not have the time to go on leaves and need all the money you have got for your business.

4. Isolation : Working for yourself sure does make you the boss but this does not excludes the fact that it leaves you in isolation. This is because you often get to work alone excluding you from the company of your friends. It’s no doubt that you have to get in contact with customers whom you would interact with but you won’t be going around telling them about your personal issues.

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5. Losing a client : Rating a self employed worker is by the success of his work, he or she tries as much as possible to please his or her client but this does not exclude the fact that no matter how one tries, you would lose one or more client during your career. So many reasons could explain the reason for a loss of a client and sometimes, it’s simply no fault of your own.

Being self employed is a tedious task one would say. At the early stage of this self employment, it is work upon work, you strive to get your things together, paying bills, attending to new customers, sacrificing the company of your friends and a whole lot more, but I tell you, once you have done your work well at the beginning, you stand to enjoy the benefits of self employment.

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6. Difficulties in separating your personal life from your professional one: The daily duties you perform when you work for yourself are typically less predictable, which might lead to more stress than when you work for an employer. Your stress levels may also increase if you are required to do numerous tasks that are unrelated to your area of expertise and are solely responsible for their success or failure.

By being as structured as you can and having a distinct plan for your immediate and long-term goals, you can reduce stress. The strain of working for yourself can be difficult to handle psychologically, but having a strategy can offer you a sense of purpose.

7. Hard work and the time it takes to build a business: Operating a business on your own is quite labor-intensive. This is especially challenging during the formative years, which are also rarely fruitful. It may feel like an endless amount of work is put into the firm to get it to a point of financial feasibility.

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Business entrepreneurs frequently underestimate the amount of work necessary to establish cash flow, which leads to many failures in the first two years of operation. Without a solid cash flow, no company can continue to operate. Many people have had to shift their business approach to survive, frequently to something entirely different. And regrettably, many companies have eluded the government’s safety net and received no funding to ensure their survival.

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8. Variable Income: There is no guarantee that you will consistently make a certain amount each month, for example. You can experience incredibly profitable days or months, as well as those where you make nothing since you have nothing to do. You should prepare for and budget for the variable pay that comes with being a freelancer. You need to be ready for the month when there will be little to no payment.

Working for yourself may allow you to save money, but you cannot certain that your income will remain the same. The first years of self-employment are sometimes challenging unless you have solid contacts before you start. Searching for new clients can be time-consuming without experience or connections. Fortunately, with some perseverance, you will acquire customers and make some living. You are not, however, exempt from late payments, which can have an impact on your expenses. Building a financial buffer is one way to avoid difficulties. And be ready to face the uncertainties.

9. Having to do everything yourself: It’s crucial to focus on increasing revenue while keeping costs to a minimum while starting a firm. As a result, you frequently end up in charge of everything, including administration, sales, marketing, and so forth. A significant portion of this can be outsourced, but only if there is enough money or a desire to do so.

When you have always been in charge, letting go might be challenging! There may seem to be an endless list of duties to do, many of which may interfere with the primary goal of your business. If you were to make the wrong decision in your job, you would also have to handle everything yourself. You are responsible for covering all costs.

Edeh Samuel Chukwuemeka, ACMC, is a lawyer and a certified mediator/conciliator in Nigeria. He is also a developer with knowledge in various programming languages. Samuel is determined to leverage his skills in technology, SEO, and legal practice to revolutionize the legal profession worldwide by creating web and mobile applications that simplify legal research. Sam is also passionate about educating and providing valuable information to people.

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IELTS Advantages and Disadvantages Essay

This essay provides a plan and model response for an advantages and disadvantages essay in your writing paper.

Essay question:

Nowadays many people choose to be self-employed, rather than to work for a company or organisation.

Why might this be the case?

What could be the disadvantages of being self-employed?

My initial ideas:

Advantages-

• You can create your own schedule
• You can dictate your own pay
• You can travel with work
• You can experience a wider variety of work
• You’re in control
• You can expand and personalise your skill set and knowledge base

Disadvantages-

• It may not be consistently financially successful
• There may be periods of unemployment
• You are responsible for your income
• You are competing with many others
• It may feel lonely

Essay structure

Introduction

Paraphrase the question

Outline main ideas

State opinion (if required)

Main body paragraph 1- Advantage

Topic sentence- example

Explanation- explain the benefits/advantages

Consequence- state the result

Main body paragraph 2- Disadvantage

Explanation- explain the problems/disadvantages

Summarise key points

Loop back to beginning

Many people nowadays are opting to work for themselves, rather than for a company. There is a more palpable shift towards self-employment and a greater detachment from more traditional working structures. This essay will demonstrate how self-employment can lead to financial freedom and more flexibility of one’s output, but it will also show how financial freedom can be risky and the idea of creative flexibility can be illusionary. Whilst acknowledging the drawbacks, this essay will argue how the advantages of self-employment outweigh the disadvantages.

One clear benefit of working for one’s self, is the possibility of financial freedom and creative autonomy. By being self-employed, one has the room to create your own salary. Rather than being hemmed in by a fixed monthly amount, a person working for themselves can exceed this and create a salary that is reflective of their work and one that does not impede them by wider company policy. Although some people can see pay rises, this is seldom seen in many industries and despite the extra hours people work, their pay quickly hits a ceiling. Whereas, self-employment means you are not determined by someone else’s view of what you should be paid. As well as this, someone who is self-employed has more creative control. This is highly important as being passionate about what you do should be a key characteristic with any job. By having more creative control, we can determine what we produce and the effect we want it to have. Therefore, we are in control and can enjoy the work we ultimately decide to produce.

On the other hand, there are obvious disadvantages to being self-employed. Firstly, it can involve some financial risk where each month does not necessarily look financially the same. There may be dips and troughs where the individual is learning less than the previous month. This could seep into other aspects of their life and make certain things difficult, such as paying bills. Secondly, having to be constantly creative can be more difficult than perceived and its reality not as utopian as it may seem. For example, if someone is starting their own business or creating a course, the sole creative output rests on their shoulders and this can be difficult to routinely produce, rather than having a brief to fill which is passed down from a senior or fellow colleague.

In conclusion, whilst there are disadvantages to being self-employed, I believe the potential possibilities and benefits of being self-employed outweigh working for a company. Whilst working for a company is preferred by some, the working world is shifting to a model that is more innovative, creative and less reliant on the traditional ways of work.

word count- 446

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Home » Career Advice » Small Business » Employment Vs Self-Employment: Pros and Cons of Working for Somebody

Employment Vs Self-Employment: Pros and Cons of Working for Somebody

Last Updated on June 19, 2024 by Career Reload Team

Have you been thinking of moving to the self-employment sector? Would it be a good fit for you? Are you ready to sacrifice a steady income and paid vacations for flexibility? Today, we are going to weigh the pros and cons of employment vs self-employment to help you make an informed decision.

When you look at it, self-employment has lots of benefits – never having to request a vacation, doing what you want to do, and the opportunities that come with flexibility. The reality is, self-employment isn’t a walk in the park. Being your own boss means sacrificing security for freedom. There have been lots of debate on this subject. In most cases, your choice will depend on your circumstances. Faith in your ability, attitude towards risk, your family situation, and personal relationships.

Shifting to self-employment

There are numerous ways to be self-employed. You can work as a freelancer or start your business to provide services to different clients across the world. You can also do all these things while you are employed by someone else. Being self-employed part-time will help you test the waters and figure out if it’s the best alternative for you.

Advantages and disadvantages of self-employment

Becoming self-employed means having fun in some areas while sacrificing other amazing things. Here are some important factors that you should consider before making your decision.

1.      Income

Will you be earning less, more, or equivalent to what you are earning right now as an employee? Most professional essay writers across the world earn an average of $50000 a year – but this figure is not conclusive since it includes workers from different industries at different levels from junior developers to senior consultants. In general, you’ll earn more by working for yourself than your employee. The one thing that you’ll lose out on is security. As a contractor or freelancer, you’ll inevitably have periods when there is no work, low profits, or worse, negative profits. You might also find yourself chasing work and being under pressure.

2.      Taxes

Most employees pay their taxes automatically through PAYE. Therefore, you don’t need anything unless you have other sources of taxable income. Being self-employed means being responsible for paying your taxes. You’ll need to keep records of your annual earnings and all expenses related to your business and fill out a tax return form. If you own a limited company, the company will be required to pay tax. If you own a limited company that offers freelancing services, you should consider how you can do away with the IR35 tax legislation which is expected to be implemented this year. Handling your tax affairs can be tiring and time-consuming.

3.      Paid holiday, paternity/maternity, and sick leave

Being an employee has lots of advantages that can be taken for granted such as paid sick leave, paid holiday, and paternity and maternity leave. If you want to enjoy these benefits in the self-employment world, you’ll need to arrange most of them on your own. Employees are usually entitled to 39 weeks of paid maternity leave if they’ve worked with the organization for a long time. When you want to have a child, you should know the adjustments that you’ll need to make to live comfortably. As for sick pay and paid holiday, you’ll need to arrange for them if you are self-employed by saving funds that you’ll use for these purposes. You’ll need to be self-disciplined to enjoy these benefits in the long run.

4.      Workplace pension

Another advantage of being employed is having a pension. Today, it’s a requirement in most nations for employers to enroll their workforce onto a pension scheme automatically. You and your employer need to contribute to it to make your future life comfortable. If you are self-employed, you’ll need to create a private pension . This is one of the most important aspects of financial planning in the self-employment world. Remember, you won’t work forever even if you want. Other investments like property don’t offer advantages like a pension. You should prioritize creating a personal pension. You can also consider increasing your contributions to match the employer’s amount.

5.      Work-life balance

The greatest advantage of working for yourself is flexibility. You can take time off whenever you want or work anywhere you want so long as work is available. This will allow you to manage your career growth around personal and family goals. You’ll need to be careful that you don’t jeopardize your earning ability. Taking too much time off can make you lose lots of clients. Most self-employed people take less time off compared to their employed counterparts. If you want security together with flexibility, you’ll need to speak to your boss. You can work at different times of the day for the same hours. Or you can work remotely too. Remote work has been accepted by most employers.

6.      Long term prospects

One of the most important goals of an employee is career development. It is known that you’ll eventually want progress. And your employer should help you achieve this. Working for yourself is quite different. Career development will depend on your experience and how you use it for instance seeking bigger long-term clients or taking ambitious contracts. You’ll be responsible for marketing yourself and making the most out of your experiences. In short, you are entirely responsible for promoting yourself. There are lots of ways that will help you develop your career such as targeting potential clients, building a strong portfolio, and developing new skills.

7.      Mortgage

Securing a mortgage is one of the challenges of self-employment. You’ll have to show that you can pay using your paycheck copies and self-assessment tax forms. You might get a poor deal if there are existing gaps in your earnings.

How secure will your job be as a self-employed person or as an employee? You are the one who’ll ultimately decide which side you’ll play on based on your circumstances, attitude, and goals. If you are an employee who wants to get into the self-employment world, you’ll need to take baby steps. Remember, anything worthwhile takes time.

Leon Collier is a writer at dissertation help and best essay writing service UK who loves to write about everything: pop culture, history, travel, self-development, education, marketing. When not writing, you can find him behind a book or playing tabletop games with his friends. Follow him on Twitter @LeonCollier12

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Essay 278 – Some people think that it is better to be self-employed

Gt writing task 2 / essay sample # 278.

You should spend about 40 minutes on this task.

Write about the following topic:

Some people think that it is better to be self-employed. Others say that it is better to work for a company or organisation.

Discuss both views and give your opinion.

Give reasons for your answer and include any relevant examples from your own knowledge or experience.

Write at least 250 words.

Model Answer:

Opinions are split as to whether self-employment or a salaried job is better. This essay will centre on both perspectives, but I believe that self-employment is a far better choice than doing a job

On the one hand, there are many cogent reasons why self-employment seems better than a paid job in a company. First and foremost, self-employed individuals can enjoy considerable independence. As self-employed persons, they decide what they do, how they do something, and when they do it. Although it sometimes proves to be difficult, and discipline needs to be maintained- but they have the option. Not only does self-employment offer freedom, but also it helps to maintain a better work-life balance. Second, self-employed persons’ income potential is higher than those who are traditionally employed. For instance, one study reveals that freelancers in the UK earn three times more than their counterparts. Last but not least, self-employed individuals can utilize their full potential.

On the other hand, a salaried job also confers several benefits. One of the primary advantages of working for an organization or company is greater job security. When commencing a job, employees sign a contract paper with their employer which provides an outline of their employment conditions as well as duties, responsibility, and rights. Apart from that, being employed by someone else means an employee gets certain benefits such as paid sick leave, paid annual leave, and a pension scheme. This provides employees with an extra level of protection in life. Finally, regular income is another obvious advantage. This means that employees get a consistent salary, regardless of profit or loss of the company, thus it makes their financial planning much easier.

To conclude, being self-employed means you are your own boss, and you can plan the business or tasks the way you feel fit. It gives the liberty to design everything the way you love it, and this is why it is a better choice than working 9 to 5 in a company.

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Self-employment is better than a job in a company

Some people say that self-employment is better than a job in a company or an institution. Discuss your opinion and give reasons to support your answer.

It is perceived by a large section of people that self-employment is a much better way of earning one’s livelihood than being employed at an institution. I agree with this ideology to some extent, as there are certain benefits that could be derived from one’s entrepreneurship. Nevertheless, it may not always be advisable to be self-employed as it is also considered to be a risky venture.

To begin with, a self-employed person works autonomously and enjoys freedom from servitude; while a salaried employee toils away under his contractual terms. As the sole owner of his business, he revels in reaping profits from his operations and also takes pride in being the sole decision maker.

Furthermore, flexible working hours and unplanned leaves are all privileges availed only by a self-employed individual. Such a concern also allows one, creative liberty which results in better productivity.

Nevertheless, being self-employed is subject to speculation and involves a great risk of loss which is to be borne by the owner alone. Also self-employment doesn’t entitle one, to paid leaves and fixed income. For instance, a salaried man can rely on a fixed paycheck at the end of the month, irrespective of the profit earned or losses incurred by the organisation, which is more than can be said for a self-employed individual.

To conclude -the notion that self-employment is better than working for an institution remains ever debatable with both having their challenging pros and cons. But selecting a particular course of action among the two eventually depends on personal preferences and suitability.

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IELTS Writing Task 2 Sample Answer: Self-Employment (IELTS Cambridge 14)

by Dave | Cambridge 14 | 12 Comments

This is an IELTS Cambridge 14 Sample Answer for task 2 writing from a real past past on the topic of work and self-employment.

If you want to get my best materials and support me, please sign up for my exclusive ielts ebooks here on patreon., regardless of the country where you are currently living, this is probably a really pertinent question. it seems that everyone wants their own business – me included, read on to see how i dealt with it as well as for some vocabulary, pronunciation, grammar activities and more, if you need some review on structures your can read about ielts task 2 writing structure here ., here are some other ielts task 2 writing sample answers that i wrote , keep up the good work.

Nowadays many people choose to be self-employed, rather than to work for a company or organisation. Why might this be the case? What could be the disadvantages of being self-employed?

An increasing number of people today are opting to start their own companies instead of working for a company mainly because of the increased support for young entrepreneurs. In my opinion, the main disadvantages of not having an employer are lack of expertise and its overall effect on businesses.

The number of self-employed is related to young entrepreneurs and has its origin in widespread angel investment across a variety of industries. one well-known example of this can be seen on the popular show ‘shark tank,’ where a panel of investors and executives hear product pitches and compete to purchase stakes in budding entrepreneurs’ businesses. this show has launched a number of successful products by securing initial funding, which has led to a trickle down effect from this show: not only has it turned specific dreams into realities but it also encourages viewers in general to be more ambitious and has therefore been one of the main catalysts for the frenzy of self-run businesses popping up in recent years., though there are undoubtedly positives to all these start-up companies, i think that the overall impact is negative because it results in many poorly run businesses. for example, in recent years a number of ride-sharing apps including uber, grab, lyft, be, go-viet and countless others have sprung up. the established companies provide a functioning app with high-quality service to meet the growing demands of this industry. however, the majority of small start-ups find themselves in over their heads with apps that barely function and driver shortages that specialise in inconveniencing customers. it would be better for the people starting these derivative businesses to either work in companies, gain valuable experience, look for gaps in the market, and then develop develop worthy competitors or simply be content to have a good job in a good company that they do not own., in conclusion, i feel that the rising number of new companies has led to a cult of overconfidence. if more people were satisfied working for others rather than pursuing unrealisable ambitions, this would likely lead to better consumer products across the board as well as increased national economic prosperity., ielts examiner sample answer analysis, 1.  an increasing number of people today are opting to start their own companies instead of working for a company mainly because of the increased support for young entrepreneurs. 2. in my opinion, the main disadvantages of not having an employer are lack of expertise and its overall effect on businesses., 1. the first sentence paraphrases the essay topic. this sentence is relatively unimportant so write it as fast your pen/pencil can fly, 2. my second sentence states my opinion – always have a clear opinion or you risk getting band 5 for task achievement…, 1.  the number of self-employed is related to young entrepreneurs and has its origin in widespread angel investment across a variety of industries. 2. one well-known example of this can be seen on the popular show ‘shark tank,’ where a panel of investors and executives hear product pitches and compete to purchase stakes in budding entrepreneurs’ businesses. 3. this show has launched a number of successful products by securing initial funding, which has led to a trickle down effect from this show: not only has it turned specific dreams into realities but it also encourages viewers in general to be more ambitious and has therefore been one of the main catalysts for the frenzy of self-run businesses popping up in recent years., 1. my first sentence is a topic sentence that gives the main idea for the paragraph: investment has led to more entrepreneurs. , 2. my second sentence begins my example. don’t waste any time getting to your example as it is all that really matters for your task achievement score, 3. the third sentence further develops and connects the example to my main idea. usually i write longer paragraphs (and shorter sentences) but there are always exceptions aim for about 4 – 5 sentences per paragraph for your writing., 1. though there are undoubtedly positives to all these start-up companies, i think that the overall impact is negative because it results in many poorly run businesses. 2. for example, in recent years a number of ride-sharing apps including uber, grab, lyft, be, go-viet and countless others have sprung up. 3. the established companies provide a functioning app with high-quality service to meet the growing demands of this industry. 4. however, the majority of small start-ups find themselves in over their heads with apps that barely function and driver shortages that specialise in inconveniencing customers. 5. it would be better for the people starting these derivative businesses to either work in companies, gain valuable experience, look for gaps in the market, and then develop develop worthy competitors or simply be content to have a good job in a good company that they do not own., 1. the first sentence is another topic sentence with the idea for the paragraph: this development is bad because it results in bad businesses., 2. my second sentence again begins my example right away., 3. the third sentence continues to develop the example. don’t run away from your examples – take some time to date them, 4. my fourth sentence also continues the same example. notice all the great vocabulary that comes out of a specific, detailed example, 5. my fifth sentence focuses on the effect of the example and relates it back to my main idea., 1.  in conclusion, i feel that the rising number of new companies has led to a cult of overconfidence. 2. if more people were satisfied working for others rather than pursuing unrealisable ambitions, this would likely lead to better consumer products across the board as well as increased national economic prosperity., 1. my first sentence states my opinion for the second time and my main reason why: overconfidence., 2. i finish the essay with a suggestion for how to encourage this in the future. be sure to have some extra detail/suggestion at the end of your writing beyond just a summary of your opinion, sample answer vocabulary, try to figure out what the words in bold below mean. don’t use a dictionary at first see if you can write your own definition based on the sentence and then check in a dictionary. guess if you have to but don’t cheat even if you want to, an increasing number of people today are opting to start their own companies instead of working for a company mainly because of the increased support for young entrepreneurs . in my opinion, the main disadvantages of not having an employer are lack of expertise and its overall effect on businesses., the number of self-employed is related to young entrepreneurs and has its origin in widespread angel investment across a variety of industries. one well-known example of this can be seen on the popular show ‘shark tank,’ where a panel of investors and executives hear product pitches and compete to purchase stakes in budding entrepreneurs’ businesses . this show has launched a number of successful products by securing initial funding , which has led to a trickle down effect from this show: not only has it turned specific dreams into realities but it also encourages viewers in general to be more ambitious and has therefore been one of the main catalysts for the frenzy of self-run businesses popping up in recent years., though there are undoubtedly positives to all these start-up companies , i think that the overall impact is negative because it results in many poorly run businesses. for example, in recent years a number of ride-sharing apps including uber, grab, lyft, be, go-viet and countless others have sprung up. the established companies provide a functioning app with high-quality service to meet the growing demands of this industry. however, the majority of small start-ups find themselves in over their heads with apps that barely function and driver shortages that specialise in inconveniencing customers. it would be better for the people starting these derivative businesses to either work in companies, gain valuable experience , look for gaps in the market , and then develop develop worthy competitors or simply be content to have a good job in a good company that they do not own., in conclusion, i feel that the rising number of new companies has led to a cult of overconfidence . if more people were satisfied working for others rather than pursuing unrealisable ambitions, this would likely lead to better consumer products across the board as well as increased national economic prosperity ., opting: choosing, entrepreneurs: people who start their own business, lack of expertise: not experts/skilled in an area, overall effect: the main impact of something, origin: cause/where it comes from, widespread: common, angel investment: early investment in a start-up company, panel of investors: group of people giving money to a product or service, product pitches: making a case/proposing a service or product, purchase stakes: buy a piece of a company, budding businesses: early/beginning/just forming businesses, launched products: started/premiered, securing initial funding: getting early money for something, trickle down effect: domino effect/effects other areas indirectly, dreams into realities: makes hopes/dreams comes true, main catalysts: primary causes, frenzy: lots of activity, popping up: appearing, though there are undoubtedly positives: despite the fact there are advantages, start-up companies: companies that are just beginning, poorly run: not well managed, ride-sharing apps: applications on your phone to call a ride like uber, established companies: well-known companies with good reputations, meet the growing demands: be able to provide a service for people who want it, in over their heads: beyond what they are capable of, barely function: hardly works at all, driver shortages: not enough drivers, specialise: focus on/become an expert in one area of, derivative: unoriginal, gain valuable experience: learn a lot, gaps in the market: areas where no company is meeting current demand/need, cult of overconfidence: lots of people being arrogant, unrealisable: impossible to make into a reality, across the board: everywhere/in all areas or industries, prosperity: wealth, vocabulary practice, remember and fill in the blanks:, an increasing number of people today are _______________  to start their own companies instead of working for a company mainly because of the increased support for young _______________ . in my opinion, the main disadvantages of not having an employer are _______________  and its _______________  on businesses., the number of self-employed is related to young entrepreneurs and has its _______________  in _______________  across a variety of industries. one well-known example of this can be seen on the popular show ‘shark tank,’ where a _______________  and executives hear _______________  and compete to _______________  in _______________  entrepreneurs’ _______________ . this show has _______________   a number of successful _______________  by _______________ , which has led to a _______________  from this show: not only has it turned specific _______________  but it also encourages viewers in general to be more ambitious and has therefore been one of the _______________  for the _______________ of self-run businesses _______________  in recent years., _______________ to all these _______________ , i think that the overall impact is negative because it results in many _______________  businesses. for example, in recent years a number of _______________  including uber, grab, lyft, be, go-viet and countless others have sprung up. the _______________  provide a functioning app with high-quality service to _______________  of this industry. however, the majority of small start-ups find themselves _______________  with apps that _______________  and _______________  that _______________ in inconveniencing customers. it would be better for the people starting these _______________ businesses to either work in companies, _______________ , look for _______________ , and then develop develop worthy competitors or simply be content to have a good job in a good company that they do not own., in conclusion, i feel that the rising number of new companies has led to a _______________ . if more people were satisfied working for others rather than pursuing _______________  ambitions, this would likely lead to better consumer products _______________  as well as increased national economic _______________ ., links from youtube and articles, worst shark tank pitches, brightwheel pitch, best pitch ever, 50 entrepreneurs share priceless advice  , comment below – do you want to open your own business someday, i’m not into that sort of thing…, i’d make a great…, i’d give it a shot if …, no chance because …, recommended for you.

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12 Comments

Hi, This is an amazing essay, but I cannot use such a framework for my own writing since it too long(more than 350 words) takes a lot of time to do that. So I should find a way to write shorter introduction and conclusion and also boy paragraphs.

Yes, some of my answers run a little too long. They are the perfect ideal! You should aim for around 300 words and you can keep it there by getting to your example fast and not wasting time with general sentences.

sir, its too diffcult for me, so i can not understant properly.so what do I do for this.sir, my reading skill is weak,firstly i can not manange in time and secondly i do not achieve more than 15 score, so please help me

If you need help with reading, you can look here: https://howtodoielts.com/category/reading/

But it seems your English level is not high enough to study for IELTS yet: https://howtodoielts.com/why-you-shouldnt-study-ielts-improve-english/

Hi, this is an awesome essay, but I answered in my own essay with three reasons for people choosing self-employment, and three disadvantages of entrepreneurship. I think this was possible because I didn’t write any examples. Is it a bad approach?

Yes unfortunately that approach is not wise because you cannot fully support your main ideas and you will probably get band 5 for task achievement. It is much better to focus on one , with a long detailed example even though that is much more difficult!

Thanks, Dave. A question just popped up in my mind when I was reading this essay. In the beginning of the second paragraph, you wrote “the number of …,” but considering the context, isn’t it correct to use “a number of…”? Is it a typo or my misunderstanding? I can’t get the exact meaning of that sentence.

Thanks a lot!

I have heard from other IELTS teachers on various platforms that we shouldn’t add anything new to the conclusion otherwise we would risk losing points. So are you absolutely sure we can include one extra bit of info at the end?

Yes, Anon, you shouldn’t add a completely new main idea to develop.

But you can add a final thought that kind of restates the importance of one of your ideas.

I know many examiners that will cap your TA score at 7 if you don’t have a final thought to finish it off!

Thank you for your great writing approach. I’m practising IELTS writing according to your method. Please help me correct this essay. Thank you very much!

In the information age, with the support of the internet, there is easier than ever to be a freelancer or entrepreneur, as a result, many workers have chosen to quit their job. I assume that this bears some pressure to those who consider to being self-employed.

There are several reasons to quit a stable job as a worker. Those who have a low-income job which provide them insufficient wages compared to opening a shop on Facebook. They can leverage their networking, friends and relatives to sale their products. It is possible for those small businesses to extend their activities if they improve their marketing skills and open more online shops on other social e-commerce platforms such as Lazada and Shoppee. For other cases of leadership spirits, they are born to be entrepreneurs who want to create their own brand name rather than working for others such as Elon Musk, Steve Jobs, Bill Gates who are the greatest CEOs of all time.

However, to be a CEO or freelancer goes along with invisible pressure. The obvious one should be capital, financial struggle while the company has not yet earned a benefit at early operating months. Another concern is a marketing strategy, if the CEO does not have a stable scheme for their organization, it is hard to build a sustainable development. The initial stage is the most difficult period because a new company has to compete with an established one which has been already well-known on the market. In addition, some companies with poor management and lack of experience could have bankrupted as soon as launching if they had not calculated carefully.

In conclusion, some causes to lead to the trend of “working for yourself”, it also includes some burden. Individuals should consider thoroughly before making any important decisions.

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IELTS Essay on Employment

Posted by David S. Wills | Aug 6, 2020 | Model Essays | 0

There are many IELTS writing topics but one of the common ones is employment . This means anything relating to the idea of working. (Of course, it could also be the opposite: unemployment .) In any case, today I will explain how to write an IELTS essay on employment.

We are going to look at two examples of IELTS writing task 2 questions about employment and then I will show you my two sample answers.

IELTS Writing Questions about Employment

The topic of employment could arise almost anywhere in the IELTS exam but it is quite common in task 2 of the writing test. In fact, the scope for what sort of question you could be asked is immense! You could be asked about employment and:

• Environment
• and much more

In short, you cannot really prepare for this by guessing the questions or having any expectation of a particular topic. Just know that you might have to write an essay about employment and that you will need to read it carefully.

IELTS Essay #1: Self-Employment vs Traditional Employment

First of all, let’s look at an IELTS writing question about self-employment.

Nowadays many people choose to be self-employed, rather than to work for a company or organization. Why might this be the case? What could be the disadvantages of being self-employed?

This is a two-part question , which means you should aim to answer both questions in the body of your essay. In a sense, this makes it much easier to understand the question and structure your answer.

However, let’s make sure that we understand it perfectly.

Question analysis

Premise: In the modern era, many people work for themselves. This is different from the past, when they worked for companies.

We have to write about two things:

• Why this has happened.
• What are the disadvantages.

In a sense, this is a rare instance where the two-part question and the advantages-and-disadvantages question come together! You can see how #1 is sort of asking for the advantages, and #2 specifically asks for disadvantages.

How interesting!

Common Problems

I have often seen my writing correction students make the mistake of confusing freelancing, self-employment, and working from home. There can obviously be some overlap between these but there are also important distinctions:

To answer this question, I would take a pretty simple, four-paragraph structure for my approach. It would look like this:

Sample Band 9 Answer

It is quite common nowadays for people to be self-employed, rather than working for a company or organization. This essay will look into the reasons for that change, and then discuss some of the disadvantages of being self-employed.

In the information era, it is quite possible for people to work at home on their computer. The internet has opened up all sorts of possibilities in terms of making money, and so people may work as freelancers or start their own company. It has never been easier to do this because in the past working for yourself required renting an office or shop, whereas now you can simply set up a website or social media profile. People typically prefer this because it allows them a great deal of freedom. A person who prefers nights and loathes waking up early might choose to conduct their business at night, whereas someone who likes to travel might work from a laptop while visiting different places.

Of course, there are some disadvantages to being unemployed. This sort of employment lacks the security of a traditional job. In most countries, workers are protected by laws that guarantee them certain rights. However, with no employer and no workplace, these laws do not apply. Similarly, traditional jobs provide pension plans and health insurance, but when you work for yourself you have to provide these yourself, and they are not cheap. In fact, most self-employed people simply forego these things and take the risk as a part of their comparatively free life.

In conclusion, being self-employed allows people a far greater degree of freedom in their life, but there are several significant drawbacks that mean this sort of work is not suitable for everyone.

Note: This essay originally appeared here .

IELTS Essay #2: Job Satisfaction

Next, we will look at an IELTS essay on employment that deals specifically with the interesting issue of job satisfaction:

As most people spend a major part of their adult life at work, job satisfaction is an important element of individual wellbeing. What factors contribute to job satisfaction? How realistic is the expectation of job satisfaction for all workers?

This is another two-part question. What a coincidence!

Question Analysis

In order to understand this question, we can again look closely at its premise:

Premise: Job satisfaction is important for a person’s wellbeing.

You have to write about:

• The factors that make people satisfied with their work
• Whether or not it is realistic for everyone to achieve job satisfaction

You should aim to write about all of this without straying off topic.

A lot of people seem to misunderstand or overlook the second question, which asks whether it is realistic for everyone to have job satisfaction . This can be a difficult thing to discuss with any depth, but you need to address it as best you can.

Here is how I will plan my IELTS essay about job satisfaction:

Although some people think that a high salary is the most important part of a job, the truth is that job satisfaction is probably more important. This essay will look at some of the factors contributing to this, and then argue that it is a reasonable expectation to have some degree of job satisfaction.

Every person is different and so defining job satisfaction is not an easy task. However, it could be stated that in order to provide this to employees, employers must give them a good justification for doing their job. The reason for this is that having a sense of satisfaction with one’s job largely comes from feeling a sense of purpose. People who feel that their efforts are useless or unappreciated invariably feel no job satisfaction. In addition to this, it is important that a person is given some degree of responsibility and autonomy with their tasks. Having a supervisor monitoring every single action presents a lack of trust and creates an atmosphere of oppression. When these two factors are met, they can result in workers who feel satisfied with their positions.

It may seem unlikely that people can achieve this because ever since the industrial revolution, it has been normal for people to work long hours in order to make money to survive, with little thought given to making workers happy or comfortable. However, in the modern world there is no good reason why this cannot be a new target. Employers should strive to give their employees dignity in the workplace, instead of maximizing productivity. Whether this is likely or not depends on social expectations and workplace laws, but it is certainly possible if the effort were made.

In conclusion, job satisfaction occurs when people are given tasks that matter and then offered some degree of responsibility. This could be given to everyone with the right motivation, although it is also possible that it may not happen.

Ok folks, I hope that was helpful for you. Now you can go and write your own IELTS essay on employment. Remember that there are many possible questions and so you should not assume that these two will appear in your next test. Also note that the topic of employment could appear in task 1 as a line graph of employment rates or any other sort of visual representation of employment and unemployment.

About The Author

David S. Wills

David S. Wills is the author of Scientologist! William S. Burroughs and the 'Weird Cult' and the founder/editor of Beatdom literary journal. He lives and works in rural Cambodia and loves to travel. He has worked as an IELTS tutor since 2010, has completed both TEFL and CELTA courses, and has a certificate from Cambridge for Teaching Writing. David has worked in many different countries, and for several years designed a writing course for the University of Worcester. In 2018, he wrote the popular IELTS handbook, Grammar for IELTS Writing and he has since written two other books about IELTS. His other IELTS website is called IELTS Teaching.

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Article Contents

1. introduction, 2. the benchmark model, 3. labour market segmentation, 4. an application to latin american data, 5. concluding comments, acknowledgements.

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Self-employment, wage employment, and informality in a developing economy

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John Bennett, Matthew D. Rablen, Self-employment, wage employment, and informality in a developing economy, Oxford Economic Papers , Volume 67, Issue 2, April 2015, Pages 227–244, https://doi.org/10.1093/oep/gpu047

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We construct a simple model incorporating various urban labour market phenomena obtaining in developing economies, and we give a diagrammatic formulation of the market equilibrium. Our initial formulation assumes an integrated labour market and allows for entrepreneurship, self-employment, and wage employment. We then introduce labour market segmentation. In equilibrium voluntary and involuntary self-employment, formal and informal wage employment, and formal and informal entrepreneurship may all coexist. We illustrate the model by an example calibrated on Latin American data, examining individual labour market transitions and implications of education/training and labour market policies.

1 See Fields (2009) for a general discussion of the complexity of labour markets in developing economies and of approaches to modelling them.

2 Galiani and Weinschelbaum (2012) analyse both sides of the market, but their focus, in particular their concern with the effects of social programs, is different from ours.

3 In the absence of functioning systems of unemployment insurance and protection from job loss, open unemployment is ‘rarely an option’ for workers in developing economies ( Ghosh, 2012 ).

4 This simplifying assumption is common in the informality literature. Its justification is that across the population we may expect differences in the ability to perform wage work to be relatively small, compared to ability in self-employment and entrepreneurship.

We develop two versions of the model. First, in our benchmark case, we assume that the market for wage employment clears, so that all labour states are ‘voluntary’. This is useful for expositional purposes, providing the groundwork for the second version of the model, in which we assume labour market segmentation. However, it is also of interest in its own right because empirical evidence suggests that in some developing economies labour markets may be largely integrated (see, e.g., El Badaoui et al . 2008 on South Africa and for general discussion of the empirical literature). In the second version we assume that segmentation is the result of a minimum wage, with which there is full compliance in formal employment. The simplicity of our diagrammatic formulation is thus bought at the cost of this limitation of the model. In practice, however, the wage floor in formal work might instead be the result of union bargaining or efficiency wage considerations, and there may be limited compliance with a minimum wage. In the concluding section we briefly discuss the potential for generalizing the model to allow for these factors.

For the benchmark model, we begin by characterizing the supply function of an agent to the three activities. Two cases are developed (depending on parameter values) that may be interpreted as corresponding to different underlying macroeconomic conditions, and the implications for labour market transitions that may occur as agents acquire greater skills are discussed. The model also generates a demand for wage labour by those agents who choose entrepreneurship. Given the joint distribution of y and z across individuals and a flexible wage rate, we characterize the labour market equilibrium and examine its comparative statics. We depict this equilibrium in a diagram which we later adapt to the second version of the model.

5 See Ahsan and Pages (2007) on India, and Almeida and Carneiro (2009) on Brazil.

6 A related phenomonen in developed economies is the worker who is made redundant and then uses his or her redundancy payment or savings to set up a business.

We end this section by considering briefly the transitions of workers between different labour market states. The empirical literature on Latin America indicates that young people tend to get informal jobs when they leave school, and these jobs are often used as a stepping stone to acquire skills. Formal employment may later be obtained, but for many the ultimate destination is voluntary self-employment ( Perry et al ., 2007 ; Bosch and Maloney, 2010 ; Cunningham and Salvagno, 2011 ). Although our model is not dynamic, it is found to be consistent with these observations.

To illustrate the model we explore an example calibrated so that it generates values that correspond broadly to Latin American data. This generates some implications for policy, albeit tentative ones given the stylized nature of the model. First, to diminish informality, a cut in the cost of formality may be more effective than an increase in the cost of informality. Second, it is more effective to provide education and training that improves the ability to produce and sell, rather than managerial skills. Third, policy changes that might have been expected to favour entrepreneurship may reduce the total number of entrepreneurs, whilst increasing (formal) employment and output by the relatively able ones.

7 Rauch’s formulation incorporates informality into the framework developed by Lucas (1978) . Jovanovic (1994) generalizes Lucas’s approach in a different direction, including heterogeneity of both labour and management skills, but he is not concerned with informality (see also Poschke, 2013 ). A variation of the approach in the present article is formulated by Bennett et al . (2012) , with individuals characterized in terms of both ability and risk aversion. It is found, for example, that the allocation of workers between informal and formal employment depends on the source of the risk involved in informal work (opportunistic non-payment by the employer or detection and penalties imposed by the authorities).

Recently, a separate branch of the literature has grown, which develops search- and-matching models of informality. In this framework additional labour market states can be added at the cost of some complexity. In particular, in the formulation by Albrecht et al . (2009) all choices are voluntary, and a worker can be in one of four states: unemployment, informal self-employment, or formal wage employment either as a new hire (an outsider) or as an insider with a higher wage. Ability is one-dimensional, and it is assumed only to affect an agent’s productivity in a formal sector job. A simulation gives insight into how workers respond to informal or formal job offers according to their ability and into the effects of different tax policies. A variation on this approach, with four labour market states (unemployment, self-employment, formal wage employment, and informal wage employment) is formulated by Margolis et al . (2012) as the basis for empirical analysis of the Malaysian labour market.

Section 2 formulates the benchmark version of the model, with a market-clearing wage rate. Section 3 introduces labour market segmentation, and Section 4 applies the model in the Latin American context, examining the policy conclusions. Section 5 concludes. Proofs are given in the Appendix.

Consider a large population P of agents, each of which is characterized in terms of two skills, Y and Z . Y may be thought of as the ability to produce and sell, and Z as managerial skill. An agent’s levels of Y and Z are distributed on the non-negative intervals y ∈ [ y ̲ , y ¯ ] and z ∈ [ z ̲ , z ¯ ] , respectively. Skills are distributed across P according to f ( y , z ). Throughout, for simplicity, we assume that f (·) is continuous and positive for all y and z .

8 This assumption is consistent with the definition Lazear (2005) gives of an entrepreneur as being conceptually distinct from a self-employed person.

9 In practice self-employment covers a wide range of activity. Self-employed production with low y may be, for example, construction work or street vending, whereas that with high y may be, for example, professional work. A similar comment applies to entrepreneurial output.

10 Since we are concerned with relatively small firms, the productive and sales skills of the entrepreneur will generally matter for a firm’s success. De Mel et al . (2010) suggest that the case for a jack-of-all-trades characterization is stronger if the market for business services is thin, as typically obtains in developing economies. Bloom et al . (2013) report on recent field experiments in developing countries that show that some forms of basic business training and advice can have significant effects on performance in small enterprises.

11 Perry et al . (2007) stress the significance of this non-pecuniary benefit in Latin America and the Caribbean. An implication in our model is that in equilibrium, depending on ability, some agents could earn more in informal wage employment than from self-employment, whereas for others the reverse is true. This is consistent with the mixed empirical evidence on which of these types of earnings is the higher (see, e.g., Agénor, 2007 ). With minor amendments, our analysis would still apply if v  = 0 or even if v  < 0, in which case v might be interpreted as the disutility of extra effort required from independent/entrepreneurial work.

12 Throughout, we simplify the exposition by only specifying strong preference.

Consider agent i yz with characteristics ( y , z ). (i) for q / p > Q ( w ) ,   i y z ∈ W if y  <  C ( w ); i y z ∈ S if either y ∈ ( C ( w ) , D ( w ) ) or both y > D ( w ) and z < z ˜ ( y ) ; and i y z ∈ E otherwise. (ii) for q / p < Q ( w ) ,   i y z ∈ W if either y  <  B , or both y ∈ ( B ( w ) , C ( w ) ) and z < B ( w ) ;   i y z ∈ S if y > C ( w ) and z < z ˜ ( y ) ; and i y z ∈ E otherwise.

Labour allocation for (a) q / p  >  Q ( w ); and (b) q / p  <  Q ( w ).

13 If there were some limited substitutability of the two skills in the entrepreneurial production function, there would be no straight boundaries between E and the other sets, but the properties of the figure would be unaffected.

14 If there is incremental acquisition of both skills y and z , and this occurs sequentially over time, then repeated switches between E and S are also possible.

The mobility implications of education and training that affect individuals’ ability Y can depend on macroeconomic factors ( p and q ) as well as individual-specific ones ( Z here).

In Fig. 1 (a), where q / p is low (strong aggregate demand) transitions may occur straight from W to E , however small the increase in Y . But in Fig. 1 (b), where q / p is high (weak aggregate demand) only a relatively large addition to skill Y would enable direct transition from W to E ; in the absence of such large additions to skill, self-employment may play an important transitional role.

The demand for wage labour is increasing in the price of the firms’ output and decreasing in the money wage. It is decreasing in the price paid for the output of the self-employed because a higher price for this output makes entrepreneurship relatively less attractive. A greater benefit, v , from independence makes entrepreneurship (and self-employment) more attractive relative to wage employment. However, this is only associated with more agents choosing entrepreneurship if there are agents on the margin of choice between entrepreneurship and wage employment ( Fig. 1 (b)).

The supply of wage labour is increasing in the money wage rate, and decreasing in the price of self-employed output and benefit from independence. If the output price p is higher then, again, provided there are agents on the margin of choice between entrepreneurship and wage employment ( Fig. 1 (b)), wage employment becomes less attractive relative to entrepreneurship for these agents, and so the supply of wage labour is lower.

If U E ( A ̲ , w ̲ ) < U S ( y ̲ ) < U W ( w ¯ ) < U S ( y ¯ ) < U E ( A ¯ , w ̲ ) then there exists a wage w ∗ ∈ ( w ̲ , w ¯ ) such that L d ( w ∗ ) = L s ( w ∗ ) and the sets E , S , W are non-empty.

If the price p of the entrepreneurial output is higher then L d is greater, as is w *. Set W is therefore larger, subject, when q / p  <  Q ( w *), to a stability condition. If the output price q for the self-employed is higher, the greater attractiveness of self-employment is associated with lower supply of and lower demand for wage labour, the latter effect arising because the supply of entrepreneurship is smaller. Thus, W is smaller, but the net effect on w * may be of either sign. A greater desire for independence v stimulates both self-employment (reducing the supply of wage labour) and entrepreneurship (increasing the demand for wage labour). The latter effect implies a greater demand for wage labour, but as the supply of wage labour is smaller we can only sign the effect on W when q / p  >  Q ( w *).

15 For each agent, the first preference is ‘voluntary’, but we only use this term in naming a set if the distinction will be necessary where we specify ‘involuntary’ sets (for which a similar comment applies).

Formal entrepreneurship, denoted E ( f ); defined by U E f > max ⁡ ( U E i , U S , U W f ) .

Voluntary informal entrepreneurship, denoted E V ( i ) ; defined by U E i > max ( U E f , U S , U W f ) .

Voluntary self-employment, denoted S V ; defined by U S > max ⁡ ( U E f , U E i , U W f ) .

Formal employment, denoted W ( f ); defined by U W f > max ⁡ ( U E f , U E i , U S ) .

16 No ( y , z ) combinations exist for which both (i) formal employment is first preference and (ii) formal entrepreneurship second preference, that is, involuntary formal entrepreneurship is not feasible.

Suppose firms may be formal, with l  >  l 0 and paying wage w f , where w f  >  w *, or informal, with l  ≤  l 0 and paying the market clearing wage w i . Then the sets E(f) , E V (i) , S V , W ( f ) + , E I ( i ), S I , and W(i) may, simultaneously, all be non-empty in equilibrium.

Involuntary informal entrepreneurs, denoted E I ( i ) ; defined by U E i > max ⁡ ( U S , U W i ) .

Involuntary self-employed, denoted S I ; defined by U S > max ⁡ ( U E i , U W i ) .

Informal employees, denoted W ( i ); defined by U W i > max ⁡ ( U E i , U S ) .

We prove the proposition by giving an example in which, indeed, the sets E ( f) , E V ( i ), S V , W ( f ) + , E I ( i ) , S I , and W ( i ) are, simultaneously non-empty in equilibrium. We delay giving this example until Section 5, however, where we relate it to Latin American data, because we wish to consider this example in its own right. The sets listed in the proposition are not necessarily non-empty, and degenerate equilibria may easily be formulated (e.g., if q / p were sufficiently high all agents would belong to set S V ). But we focus on cases in which all the sets (except possibly E I ( i )) are non-empty because these correspond to the labour markets observed in practice.

17 In Fig. 1 (a) and 1 (b) Q ( w ∗ ) is the critical value of q / p determining whether the borderline value of y (and of z for entrepreneurship) at which UW  =  UE is greater or less than that at which UW  =  US . Now two different values of Q come into play, depending on whether an employed agent earns w f or w i .

18 If w f is not significantly above w * the horizontal boundary of the set E ( f ) will meet the upwards-sloping boundary of set E V ( i ) and terminate there.

Labour allocation for (a) q / p  >  Q ( w i , w f ) >  Q ( w i , w i ); (b) Q ( w i , w f ) >  q / p  >  Q ( w i , w i ); and (c) Q ( w i , w f ) >  Q ( w i , w i ) >  q / p . Shaded area denotes the set W ( f ).

First, using eqs (1–7) with w  =  w f and eq. (10) , we determine the ( y , z ) characteristics of the members of the ‘first-preference’ sets E ( f ), E V ( i ), S V , and W ( f ). The first three of these sets are shown unshaded, whereas set W ( f ) is shown by the entire shaded area in each panel.

Second, because the rationing scheme has not been specified, note that membership of set W ( f ) + may come from anywhere in the shaded area (set W ( f ) ) in each panel.

Third, disregarding temporarily the allocation of agents to set W ( f ) + , we treat the shaded area in the same way as we did the whole of ( y , z ) space in Fig. 1 (a) and 1 (b). Thus, for the agents concerned, we show the preference amongst the three options of entrepreneurship, self-employment, and informal wage employment, given that all three options are involuntary in the sense that these agents would prefer formal wage employment. Hence we determine the ‘second-preference’ sets E I ( i ), S I , and W ( i ), with the proviso that a selection of agents with ( y , z ) characteristics consonant with these sets, belong instead to set W ( f ) + .

For a given ( y , z ) distribution, we assume that w i adjusts endogenously such that informal wage labour supply (from set W ( i )) equals informal wage labour demand (from set E V ( i ) ∪ E I ( i ) ). The other allocations are determined simultaneously. It can be seen that relatively highly skilled agents with a balanced skill set become formal entrepreneurs, whilst those not quite so highly skilled and/or with not quite so balanced skill sets become voluntary informal entrepreneurs. Agents with a high y but sufficiently low z become voluntarily self-employed.

The rationing scheme for formal wage employment may create an (additional) inefficiency, with output being forgone from self-employment, and both informal and formal entrepreneurial firms.

Unless the formal wage employees are those with the smallest y endowments in the shaded area in each panel of Fig. 2 , some output by the involuntarily self-employed is forgone. Also, in Fig. 2 (b) and 2 (c), insofar as some agents from the shaded area associated with E I ( i ) gain formal employment, there is a negative effect on informal wage labour demand and the supply of informal output. This negatively affects the informal wage rate w i , causing substitution out of formal wage employment and output.

19 As in the benchmark model, if q / p is sufficiently large, there can be non-monotonic transitions from self-employment to entrepreneurship and back again.

20 The proportions of employment are cross-country averages derived from Table 2.1 of Perry et al . (2007) , which uses the social protection/legal definition of informality. There is wide variation across countries and types of worker in the formal-informal wage gap. The figure of 59% in the text relates to an average-earnings job in Argentina.

21 This value is consistent with recent research reviewed by Carter (2010) —albeit for developed economies—which argues that the compensating differential from self-employment is substantially smaller than the widely cited estimate of Hamilton (2000) of 35% of equivalent employment income.

We search numerically for the parameter values that obtain in our model under the assumption that the rationing scheme for allocating agents in set W ( f ) to set W ( f ) + is random. Because we use a dense lattice to approximate the infinite population of agents assumed in the model, a small degree of coarseness prevents us from matching these statistics with absolute precision. However, after adjusting the first three statistics above to account for entrepreneurs, the reported estimates (shown under Table 1 ) match to within 1 percentage point. For these calibrated parameter values, the price of entrepreneurial output p is around two-thirds higher than the price of self-employed output q . Table 1 shows the comparative statics of various parameter changes. The first five columns show the signs for small increases in the value of each of the parameters listed, and last two columns give the effects of positive incremental shifts in the distributions shown.

An example for Latin America

Notes: q = 0.55 , p = 0.9 , α = 0.5 , v = 0.1 , w f = 1.1 , l 0 = 5 , σ = 1.63.

The comparative statics signs shown in the table can be understood intuitively for any parameter by considering the effect on first preferences and then on second preferences. Consider, for example, an increase in the self-employed price q . Because there are no agents on the borderline of choice between formal entrepreneurship and self-employment, this has no effect on set E ( f ), and therefore none on W ( f ) + . However, it causes a switch in first preferences away from formal employment and informal entrepreneurship towards self- employment, and so set E V ( i ) becomes smaller and S V larger. The higher value of q also causes a shift towards self-employment as a second preference, and so set S I becomes larger, but W ( i ) and E I ( i ) smaller. Although the supply of informal labour falls, the decrease in the demand dominates and w i falls. Overall, there are more self-employed and fewer entrepreneurs and wage workers. Similar explanations can be given for other parameter changes, but for brevity we focus on some potential policy tools.

First, consider changes in parameters w f and l 0 . l 0 can be regarded as a policy tool even if it is not fixed by government regulation; changes in the probability of detection of informality or in the penalties when caught would affect the informal employment level that entrepreneurs are willing to set. A lower w f is a reduced cost of formality, whereas a lower l 0 , limiting informal firm size further can be interpreted as an increased cost of informality. We might expect each of these changes to result in less informality. Indeed, reducing w f does cause E ( f ) and W ( f ) + to become larger, whilst E V ( i ) and W ( i ) become smaller. However, whilst a reduction in l 0 also causes E ( f ) and W ( f ) + to expand and W ( i ) to contract, the effect on informal activity is not clear-cut, for it expands E V ( i ) and E I ( i ). Thus, in this example, if the aim is to reduce informality, a reduction in w f might be preferred. Nonetheless, although a reduction in the minimum wage rate is a shift towards the (static) first best, the reduction it causes in the number of informal entrepreneurs may also have an adverse longer-term effect if informal entrepreneurship provides a learning experience for some potential future formal entrepreneurs.

Second, the results are suggestive of the effects of different types of education/training. In Table 1 a general increase in skill Z expands both E ( f ) and E V ( i ), as well as W ( f ) + and W ( i ), whilst both S V and S I are diminished. However, a general increase in skill Y , with or without an associated increase in Z , diminishes E V ( i ) and W ( i ), whilst a switch occurs into S V from S I . Suppose that both general education and on-the-job training would increase the stock of Y , whereas specialist management training is required to increase the stock of Z . This suggests that, if the aim is to reduce informality then, because of the role played by voluntary self-employment, general education and on-the-job training is more effective.

We construct a parsimonious model that captures some of the complexity that obtains in urban labour markets in developing economies. In the benchmark version the labour market is unsegmented and agents may be in one of three states—self-employment, wage employment, and entrepreneurship. The second version of the model adds labour market segmentation. In equilibrium, voluntary and involuntary self-employment, formal and informal wage employment, and formal and informal entrepreneurship (the latter possibly dividing into voluntary and involuntary components) may all coexist. We also develop a diagrammatic interpretation of the segmented and the unsegmented cases.

Our analysis suggests the importance of underlying macroeconomic conditions in determining the effects of education and training on transitions of individuals between labour market states, and that these transitions may be non-monotonic. The role of the rationing scheme by which workers are selected for formal jobs is also highlighted. As an illustration, a numerical example is developed that generates results that correspond closely to Latin American experience. In this example, if the government wishes to reduce informality, reduction of the costs of formality is generally more effective than increasing the costs of informality, whilst education and training that improves the ability of individuals to produce and sell is more effective than increasing managerial skills.

These results are obtained from a highly stylized model, in particular from the assumption of a competitive labour market, the only imperfection being that a minimum wage must be paid by formal employers. However, we conjecture that some alternative assumptions could be accommodated into our framework relatively easily. For example, partial compliance by formal firms with the minimum wage law would shift the boundary between formal and informal entrepreneurship to the south-west in Fig. 2 (assuming that expected penalties for detection are not too large). The potential effects would include a substitution into formal from informal entrepreneurship and, as the informal wage would be driven up, there would also be a substitution out of informal entrepreneurship into voluntary and involuntary self-employment.

Similar effects would be obtained if trade unions were included in the model, with insiders and outsiders amongst formal-firm employees. However, a more radical overhaul of the analysis would be required to allow for decentralized bargaining between unions and employers, or for efficiency wages. For example, in a moral hazard or nutritional model it would have to be taken into account how worker productivity depends on wage rates. A more straightforward generalization that might be made would be to allow for heterogenous innate ability in wage work. Amongst other factors that might be included are free labour provided by the family and wealth and liquidity constraints that might hold back both self-employment and entrepreneurship.

We are grateful for helpful comments by Nancy Chau, Francis Teal, and two anonymous referees. We also thank participants at the IZA/World Bank Workshop on Institutions and Informal Employment in Emerging and Transition Economies, Bonn, 2011, and at a seminar at the CSAE, Oxford.

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Now consider the conditions under which self-employment is preferred. We have seen that y > C ( w ) ⇒ U S > U W , so now consider what is required for US  >  UE . First, suppose A  =  z ; then, from eq. (7) , UE  >  US if A > [ D ( w ) ] α y 1 − α ≡ z ˜ ( y ) . For this to be consistent with A  =  z we require y ≥ z ˜ ( y ) . Note that, for y  > 0, z ˜ ( y ) has a unique fixed point, z ˜ ( D ( w ) ) = D ( w ) , and that z ˜ ′ ( y ) = ( 1 − α ) [ D ( w ) ] α y − α > 0 , so that z ˜ ′ ( D ( w ) ) = 1 − α < 1 . Because also z ˜ ″ ( y ) = − α ( 1 − α ) [ D ( w ) ] α y − α − 1 < 0 , this implies that y ≷ D ( w ) ⇔ y ≷ z ˜ ( y ) . Hence, if y > D ( w ) , we have U S > U E ⇔ z < z ˜ ( y ) . Alternatively, suppose A  =  y . Then, from eq. (7) y < D ( w ) ⇒ U S > U E .

From eq. (9) , w = w ̲ ⇒ W = ∅ ;   w = w ¯ ⇒ E = ∅ . Therefore, L s ( w ̲ ) = 0 ;   L d ( w ¯ ) = 0 . If w = w ̲ ,   U E ( A ¯ , w ̲ ) > U S ( A ¯ ) ⇒ E ≠ ∅ ⇒ L d > 0 ; and if w = w ¯ ,   U W ( w ¯ ) > U S ( y ¯ ) ⇒ W ≠ ∅ ⇒ L s > 0 . It follows that if both U E ( A ¯ , w ̲ ) > U S ( A ¯ ) and U W ( w ¯ ) > U S ( y ¯ ) , the excess demand functions satisfy L d ( w ̲ ) − L s ( w ̲ ) > 0 and L d ( w ¯ ) − L s ( w ¯ ) < 0 . Then, by the continuity of L d   −  L S , there must exist a w ∗ ∈ ( w ̲ , w ¯ ) such that L d ( w ∗ ) − L s ( w ∗ ) = 0 . Additionally, if w = w ̲ then U E ( A ̲ , w ̲ ) < U S ( A ̲ ) ⇒ S ≠ ∅ , and if w = w ¯ then U W ( w ¯ ) < U S ( y ¯ ) ⇒ S ≠ ∅ . The proposition follows.

Writing labour supply and supply as L s ( w , i ) and L d ( w , i ) , respectively, where i = ( p , q , v ) , when w = w ∗ ,   d w / d i = ( L i d − L i s ) / ( L w s − L w d ) . Using Lemma 1 with this equation yields d w / d p > 0 ,   d w / d q ≷ 0 , and d w / d v > 0 . Thus, (i) d L / d p = L w d ( d w / d p ) + L p d = ( L p d L w s − L w d L p s ) / ( L w s − L w d ) ; from Lemma 1, L w d − L w s < 0 and if q / p > Q ( w ) ,   L p s = 0 and the result for dL / dp follows; (ii) d L / d q = ( L q d L w s − L w d L q s ) / ( L w s − L w d ) < 0 ; (iii) d L / d v = ( L v d L w s − L w d L v s ) / ( L w s − L w d ) and the result in the lemma follows.

Borderline preferences with labour market segmentation

To compare the utilities from the different activities we use eqs (11) and (12) .

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Essay on Employment

Students are often asked to write an essay on Employment in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Employment

Understanding employment.

Employment is when someone works for a company or for themselves, earning money to live. It’s a crucial part of our lives, helping us support ourselves and our families.

Types of Employment

There are different types of employment. Full-time jobs are where people work a set number of hours a week. Part-time jobs require fewer hours. Self-employment is when one runs their own business.

Benefits of Employment

Employment has many benefits. It provides income, helps us learn new skills, and can give us a sense of accomplishment and purpose.

So, employment is essential for economic stability and personal growth. It’s a vital part of our society.

250 Words Essay on Employment

The concept of employment, the changing landscape of employment.

The employment landscape is in a constant state of evolution, influenced by technological advancements, globalization, and socio-political shifts. The rise of the gig economy, remote work, and automation are reshaping traditional employment paradigms, necessitating adaptability and lifelong learning.

The Impact of Employment on Society

Employment impacts society in many ways. It aids in poverty reduction, enhances social inclusion, and contributes to economic growth. Conversely, unemployment can lead to social unrest and economic instability. Thus, creating sustainable employment opportunities is a key policy objective for governments worldwide.

Challenges and Future Prospects

Despite its importance, the world faces significant employment challenges. Youth unemployment, gender disparities, and the threat of job obsolescence due to AI and robotics are pressing issues. It is imperative to develop robust strategies to ensure equitable access to quality jobs and foster an environment conducive to innovation and entrepreneurship.

In conclusion, employment is a multifaceted concept with profound societal implications. As we navigate the changing employment landscape, it is essential to foster a holistic understanding of employment and its impacts, and to proactively address the challenges it presents. The future of work will be determined by our ability to adapt, innovate, and maintain a human-centric approach in the face of technological change.

500 Words Essay on Employment

Introduction.

Employment is a fundamental aspect of human life, providing not only a means of livelihood but also a sense of purpose and identity. It is a multifaceted concept that goes beyond the simple exchange of labor for wages, encompassing factors such as job satisfaction, career progression, and work-life balance.

The Importance of Employment

The dynamics of employment.

The world of employment is dynamic and constantly evolving, shaped by factors such as technological advancements, economic trends, and societal changes. Technological innovation, for instance, has led to the emergence of new industries and job roles while rendering others obsolete. This necessitates lifelong learning and adaptability among workers to stay relevant in the job market.

The Challenges of Employment

Despite its importance, achieving full, productive, and freely chosen employment is a challenge faced by many. Unemployment and underemployment, characterized by inadequate work opportunities and low-quality jobs, remain persistent issues worldwide. These challenges are further exacerbated by discrimination and inequality in the labor market, which prevent certain groups from accessing decent work.

The Future of Employment

Looking ahead, the future of employment is likely to be shaped by several key trends. The ongoing digital revolution, for example, is expected to further transform the labor market, giving rise to new forms of work such as remote and gig work. Similarly, the growing focus on sustainability is likely to create job opportunities in green industries while potentially displacing jobs in more polluting sectors.

In conclusion, employment is a complex and evolving phenomenon that is central to economic prosperity and social well-being. As we navigate the changing landscape of work, it is crucial to ensure that employment opportunities are inclusive, equitable, and decent. This will require concerted efforts from all stakeholders, including governments, employers, workers, and educational institutions, to create a labor market that is resilient, dynamic, and fair.

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