Eastward enlargements of the European Union, transitional arrangements and self-employment

Abstract

When the European Union expanded eastward in 2004 and 2007 to accession the so-called EU8 and EU2 countries, respectively, the incumbent member states imposed temporary restrictions on the employment of EU8 and EU2 nationals. Self-employed individuals were exempted from these transitional arrangements, prompting concerns that self-employment could be used as a means to evade the restrictions on labour market access. If the transitional arrangements led to an increase in EU8 and EU2 nationals' self-employment rates, as previous research suggests, then their removal should have led to a corresponding decrease. This article analyses whether the latter has indeed been the case. Using pooled cross section data from the EU Labour Force Survey, over the period 2004-2019, we show that removing the transitional arrangements has had a negative effect on the self-employment rates of EU2 nationals, but seemingly no effect on the self-employment rates of EU8 nationals. Distinguishing between types of capitalist regimes, however, reveals a much more nuanced picture, with significant variation in terms of the magnitude and significance of the effect across groups of countries.