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Financial Capital, Human Capital, and Self-Employment in the UK

  • School: Nottingham Business School
  • Starting: 2021
  • Funding: UK student / EU student (non-UK) / International student (non-EU) / Self-funded


Why become self-employed and what are the key factors causing the utility from self-employment to exceed that from paid employment? Mark Taylor (1996) has shown that higher expected earnings in self-employment relative to paid employment are a major attraction. The independence and freedom offered by self-employment are clearly appealing. However, there are those who desire job security and therefore prefer paid employment. Ajayi-Obe and Parker (2005) mentioned that “the self-employed enjoy a non-pecuniary benefit from work itself (e.g., independence) that makes a given amount of work in that occupation relatively less unattractive than the same amount of work would be in paid employment”. Schmitz (1989) presents a model in which endogenous entrepreneurial activity is the key determinant of economic growth. The theory also differs from standard model in that growth is driven by the imitative activities of entrepreneurs.

Evans & Leighton (1989) found liquidity constraints play a role when setting up a firm, as the availability of capital is a significant barrier to self-employment. However, the human capital model indicates that the more educated and skilled self-employed are likely to find it easier to raise external finance for their business. Therefore, Cressy (1996) has argued human capital and not finance is the main constraint on self-employment. This project will test whether financial capital and/or human capital is the main constrain of self-employment in the UK.


Ajayi-Obe, O. and Parker S.C. 2005 The Changing Nature of Work among the Self-employed in the 1990s: Evidence from Britain, Journal of Labour Research, 26 (3): 501-507

Cressy, R 1996 Are Business Start-ups Debt-Rationed? The Economic Journal, 106 (438): 1253-70

Evans, D S & Leighton, L S 1989 Some Empirical Aspects of Entrepreneurship, American Economic Review, 79 (3): 519-35

Schmitz J. A. Jr. 1989 Imitation, Entrepreneurship, and Long-Run Growth, The Journal of Political Economy, 97 (3): 721 – 739

Taylor M. P. 1996 Earnings, independence or unemployment: why become self-employed? Oxford Bulletin of Economics and Statistics 58(2): 253-267


Dr Zhongmin Wu

Entry qualifications

An applicant for admission to read for a PhD should normally hold a first or upper second class honours degree of a UK university or an equivalent qualification, or a lower second class honours degree with a Master's degree at Merit level of a UK university or an equivalent qualification.

International students will also need to meet the English language requirements - IELTS 6.5 (with minimum sub-scores of 6.0). Applicants who have taken a higher degree at a UK university are normally exempt from the English language requirements. A research proposal (between 1,000 and a maximum of 2,000 words) must be submitted as part of the application.

For more information please visit the NTU Doctoral School – Research Degrees webpages.

How to apply

For a step-by-step guide and to make an application, please visit our how to apply page.

For informal enquiries about this project, please email Zhongmin Wu.

Fees and funding

Find out about fees and funding for PhD projects.

Guidance and support

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Zhongmin Wu