Own-Account Workers and Labor Fissuring

Presenter

Enrichetta Giurickovic (Paris School of Economics)

Abstract

Institutions and digital technologies have eased the supply of freelance labor to firms, creating a flexible workforce outside official headcounts. Yet the firm-side consequences of the surge in freelance work remain underexplored due to longstanding observability obstacles. This paper provides the first firm-level evidence on how firms reorganize when access to own-account workers expands. I leverage a French reform that sharply lowered entry costs into self employment as a quasi-experimental setting. Using comprehensive administrative data and a shift–share approach, I show that when freelancers become more available in the occupations a firm uses, firms reduce their payroll workforce, increase value added, and retain the gains as higher profits. Wage patterns reflect compositional upgrading rather than rent-sharing: the retained payroll workforce tends toward a smaller, higher-paid core, with a hollowing-out effect on payroll outcomes. The evidence fills a gap in the existing supply-side-focused literature by showing that freelance labor increases firms’ profitability while deepening the fissuring of work inside firms, intensifying labor-market segmentation and raising policy questions about classification and the incidence of flexibility.