The decision to moonlight: does second job holding by the self‐employed and employed differ?

• Author: João R. Faria,Andrew Atherton,Dongxu Wu,Zhongmin Wu,Daniel Wheatley
• DOI: http://doi.org/10.1111/irj.12135
• Published date: 01 May 2016
• Date: 01 May 2016

The decision to moonlight: does second job

holding by the self-employed and employed

differ?

Andrew Atherton, João R. Faria, Daniel Wheatley,

Dongxu Wu and Zhongmin Wu*

ABSTRACT

This article considers drivers of second job holding among the self-employed in comparison

with the employed. Econometric analysis of panel data explores whether the self-employed

are more or less likely to take on a second job when already running their own business

than their employed counterparts. The findings contribute to the literature through identi-

fication of a need-based variable—difficulty in meeting housing costs—as a key driver of

movements from self-employment to hybrid entrepreneurship. Findings, further, identify

different patterns of second job holding by gender, particularly among self-employed

individuals.

1 INTRODUCTION

This article investigates the rationale for the self-employed to hold a second job, and

whether this form of moonlighting differs from those in employment. Although there is

growing recognition that individuals can run their own business and concurrently hold a

second job as an employee, the focus of this literature has been on part-time working as

a means of entry into self-employment (Burke et al., 2008; Folta et al., 2010). This article

extends the literature, contributing to our understanding of self-employment by presenting

evidence that ‘hybrid entrepreneurship’, that is, the holding of paid employment at the

same time as owning and running a business, occurs not only as an entry step into self-

employment, as has been proposed previously (Folta et al., 2010), but also as a method

of sustaining self-employment. Moreover, the article contributes to our understanding of

the relationship between financial hardship—using a need-based variable (difficulty in

meeting housing costs)—and second job holding and considers the role of household

factors in patterns of second job holding among the employed and self-employed.

Self-employment can offer significant flexibility and work autonomy and so represents an

opportunity for a different way of working to paid employment (Fraser and Gold, 2001).

However, self-employment also generates uncertainty, stress and anxiety for entrepreneurs

who have responsibility for ensuring the survival and success of their business (Fenwick,

2006). Movements between employment and self-employment may be motivated by

❒Andrew Atherton, Lancaster University, Lancaster, UK, João R. Faria, COLA, The University of

Texas at El Paso, El Paso, TX, USA, Daniel Wheatley and Zhongmin Wu, Nottingham Business

School, Nottingham, UK and Dongxu Wu, Fitzwilliam College, University of Cambridge, Cambridge,

UK. Correspondence should be addressed to Zhongmin Wu, Reader in Economics, Nottingham

Business School, Nottingham Trent University; email: zhongmin.wu@ntu.ac.uk

Industrial Relations Journal 47:3, 279–299

ISSN 0019-8692

© 2016 John Wiley & Sons Ltd

‘entrepreneurial pull’or ‘unemployment push’, with the latter estimated as accounting for

up to 48% of movements into self-employment (Dawson and Henley, 2012). In recent years,

casualisation of the workforce, and the replacement of secure paid employment with short-

term contract work (Raess and Burgoon, 2015, 95–96), has resulted in self-employment

offering the only viable option to work for some individuals. Meanwhile, those already

self-employed have faced particular challenges since the 2008 financial crisis, which created

particular short-term pressure on the financial viability of many entrepreneurs’businesses

including limiting access to credit (Cowling et al., 2012).

In response to these pressures, the self-employed may ‘moonlight’

1

by taking on a

second job (Renna, 2006). Taking on paid employment alongside self-employment

can be driven by a range of factors. Second job holding may reflect low capitalisation

of the entrepreneur’s business, a particular feature of smaller enterprises, and

particularly women-owned businesses (Hundley, 2001). Moonlighting may occur

when entrepreneurs wish to retain links with previous employers or clients, especially

when self-employment is viewed as a career ‘stage’rather than a permanent

commitment (Hytti, 2010). When wider macro-economic conditions place pressures

on smaller enterprises, as has been the case in recent years in the OECD economies,

second job holding can supplement reduced income from the owner-managed

business (Flandez, 2009). However, owner-managers would rationally only take on

a second job with an expectation that this is an interim arrangement until returns

improve from self-employment.

In this article, the multiple job holding behaviours of self-employed individuals

and employees are compared using data from waves 1–18 (1991–09) of the British

Household Panel Survey (BHPS).

2

The UK economy offers an interesting empir-

ical focus as it has adopted a liberal employment policy, with growing flexibility,

and uncertainty, characterising paid work (Lewis and Campbell, 2008). Self-

employment has risen over the period analysed, to approximately 13.5% of the

workforce in 2009. At the same time, income from self-employment has declined

significantly in recent years (ONS, 2014). Estimates from the end of 2009 report

approximately 4% of the UK workforce holding a second job, with marginally

more women reporting dual job holding (Labour Force Survey, 2009).

2 SECOND JOB HOLDING

2.1 Theories of second job holding applied to the employed and self-employed

There are several theoretical frameworks that seek to explain why individuals take on

multiple jobs, including the following: (1) main job hour constraint; (2) heterogeneous

jobs; and (3) main job insecurity models.

The main job hour constraint model

The main job hour constraint model (Paxson and Sicherman, 1996; Shishko and Rostker,

1976) suggests that employees take on a second job when they would like to work more

1

Moonlighting is used interchangeably with the term second job holding in this article and therefore sig-

nifies taking on a second job of employed labour. It does not signify undertaking self-employment or busi-

ness start-up while holding a main job as a paid employee.

2

From its inception, the BHPS included samples from England, Scotland and Wales, and from 2001, a

sample from Northern Ireland was added, providing a sample of around 10,000 households from across

the UK (BHPS, 2009).

280 Andrew Atherton et al.

© 2016 John Wiley & Sons Ltd