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Freelancers Value Freedom More than Money

The income and satisfaction freelancers get from their work depends largely on their professional self-worth. Education and experience are rewarded financially but these don’t determine an individual’s sense of job satisfaction. Researchers Denis Strebkov and Andrey Shevchuk presented these findings in a paper at the HSE XV April International Conference on Economic and Social Development – ‘How does Human Capital Influence the Income and Job Satisfaction of Self-employed Professionals?’

Self-employment is generally perceived in Russian society as a survival strategy, as part of the secondary, temporary or incidental employment mostly found in low-qualified jobs.

But the number of self-employed, or freelancers, working in IT, graphics and industrial design, journalism, translation, photography, video and audio, advertising, marketing, engineering and construction development, and many other areas is growing rapidly. They are a key part of the internet economy, the creative industries, and other sectors which require highly-qualified creative professionals with the latest IT skills. Many freelancers are engaged in distance-working – through the internet, which means they’re not tied by geography or restricted by government or political boundaries.

Senior research fellows at the HSE Laboratory for Studies in Economic Sociology, Denis Strebkov and Andrey Shevchuk said, in their study of job and life satisfaction among Russian freelance professionals, ‘The production potential for self-employment on the internet is based entirely on human capital, ie, the skills and abilities of workers. It is a market with its own specific characteristics, firms don’t invest in training staff or require proof of qualifications, work is individualised and creative and there is a rapid obsolescence of skills.’

These characteristics set the researchers thinking. Is there a return on formal education on this market, or do you accumulate human capital through practical experience? Does it pay to work in your specialist field or are educational qualifications not that relevant? What is the best indicator for the level of accumulated human capital?

The researchers analysed how various indicators of human capital affected the work-life satisfaction of freelancers. They pointed out that, “As well as giving us a better understanding of how this new employment sector works, we are broadening the general perception of the job market by testing sociological and economic concepts on a new research topic.”

Freelancers: Educated thirty-somethings

An online survey Freelancer census conducted by the researchers in 2014 on the largest Russian language freelance jobs website FL.ru served as the empirical basis for this study.

The researchers used a sub-sample of 4,384 people (27.4% of the total), for whom freelancing is the only source of income. They are all graduates (those with secondary jobs and without a degree were de-selected). 49% are men and 51% women. Their average age is 33 and they have been freelancing on average for 3-4 years with a current average monthly income of 33,000 roubles (about 1,000 USD).

About two thirds (64%) of freelancers have degrees, 30% do not, but 6% have two degrees or a post-graduate qualification.

Two thirds (67%) are married or in long-term relationships. 17% have children under 3 who need full-time care, 26% have children under 16.

One fifth of freelancers live in Moscow and St Petersburg, 39% of the respondents in the survey live in other parts of Russia and 41% live abroad, mainly in Ukraine (30%) but also in Belarus (4%), Kazakhstan and Moldova (2% in each).

The researchers used income, job satisfaction, education, whether the job matches qualifications, length of time spent freelancing and how people rate their own professionalism as parameters to clarify the interconnections of the freelance experience.

The control variables included a standard selection of socio-demographic CVs – place of residence, area of professional work, academic qualifications, how many hours worked per week. In regression models for job-satisfaction they also measured incomes.

The more you know the more you earn

Stebov and Shevchuk found that freelancers’ incomes correlate directly to their education and professional skills. “All else being equal”, they say, “people with PhD equivalents or two degrees, who rate themselves highly as professionals and have been freelancing the longest get paid the most. The research shows the same to be true for men and women, but regression coefficients have a higher significance for men, which shows human capital is a more determining factor for their incomes.”

For male freelancers, income doesn’t depend on their degree subject, but for women it plays a crucial role. Working in their subject area makes a big difference to women freelancers in how much they can earn.

The research also showed that with age, freelance incomes grow, but the connection is not straightforward.

There is a positive connection between pay and having a family partner or spouse. Freelancers with toddlers who need full-time care earn less but those with older, more independent children have a higher level of income than childless freelancers, even.

There is also a positive correlation between income and how long you have been freelancing. The more you work, the more you earn.

Satisfaction comes with being good at the job

The factors that determine job satisfaction show another side to the situation.

Although women freelancers earn less than men, their job-satisfaction levels are markedly higher. Among all the variables characterising human capital, men’s assessment of their professionalism is the only thing that has a positive correlation to the level of satisfaction. Women feel that, besides professionalism, it matters a lot that freelance work fits their academic qualifications.

Here the age factor is opposite to that connected with income. Young people show the highest levels of job satisfaction, but as we move into older age groups the satisfaction levels go down.

There is a huge difference in influence on socio-economic results of the individual in regional variables: income levels are much higher in Moscow and St Petersburg than in all other parts of Russia, but job-satisfaction is the reverse.

Freelancers living abroad have lower incomes but higher job satisfaction. Control variables like whether children in the family need full-time care and hours worked per week are not connected with levels of job-satisfaction.

The main thing is to rate yourself highly

Strebkov and Shevchuk conclude that for freelancers, incomes and satisfaction depend largely on how they rate themselves professionally.

‘This variable has a strong and steady influence in all the models regardless of gender. Evidently, this is a highly complex indicator – it contains an individual’s level of training and education (both formal and informal), how much experience they have, and even categories that are extremely hard to gauge like talent and luck. It is broader than any of the other variables we examined and so is the best suited to operationalisation of the concept of human capital regarding self-employed professionals.’

Strebkov and Shevchuk also found something like a compensation effect among freelancers – people who don’t receive a large income have other advantages which allow them to be happy in their work, for example flexible working hours, distance working and creativity in the job.

 

April 11, 2014