From sofa to start-up: employees working remotely tend to become self-employed

Home office employees are more likely to set up their companies than office employees. According to a study by the National Bureau of Economic Research (NBER) in Massachusetts, more people became self-employed during the coronavirus pandemic if they worked in companies with a high proportion of home office workers. At least 11.6 percent of the increase in start-ups after the pandemic can be explained by working from home, the authors wrote in their study.

Experienced employees start up more often

Overall, the probability of employees becoming self-employed increased by around seven percent during the coronavirus pandemic. There was a particularly high number of start-ups among employees of small and young companies. A high proportion of employees working from home before the pandemic also increased the likelihood of new companies. The characteristics of the staff also had an impact. Employees with less seniority, a higher level of education, seniority, and salary as well as start-up experience were more likely to switch to self-employment.

The authors of the study identified different motivations for the increased number of start-ups. For example, there were employees who wanted to try out self-employment due to the additional flexibility of working from home. Others, on the other hand, had already decided to set up their own company permanently. The researchers cited the increased free time as a possible reason for this, as commuting between home and work was no longer necessary. It was also possible to work on their projects during breaks without being noticed by their employer or colleagues. The existing permanent position also provided additional security.

However, the authors of the study also pointed out that redundancies during the coronavirus pandemic were a further motivation for starting their own business. However, it was more likely that employees would voluntarily resign than return to the office.

Researchers: Working from home could harm companies

For their study, the researchers analyzed information from LinkedIn profiles. They looked at changes in job title and employment relationship that indicated a change from employee to company owner. They also used IP address data that can be used to infer the employment relationship, for example by using a VPN connection to a company network. From both data sets, they identified a correlation between employees working from home and people who founded new companies.

Considering their findings, the authors of the study recommend that companies should reconsider their home office offering, as it could harm them in the long term. In macroeconomic terms, working from home could lead to the founding of start-ups that create new jobs in the long term and represent additional competition on the market.

However, the link between working from home and start-ups does not seem so clear-cut. Other researchers from the NBER came to the opposite conclusion in a study from 2024 – namely that working from home has an inhibiting effect on start-ups. The number of start-ups had declined, as there was no need for additional flexibility. This was already covered by working from home. However, this study relied on a public company register instead of LinkedIn as a database.

So far, there is no clear trend in the use of working from home. Large companies such as Dell are calling their employees back to the office, while in Germany there are more job advertisements with the option of working from home.

(sfe)