SELF-EMPLOYMENT OF THE POPULATION IN THE REGIONS OF LATVIA
SELF-EMPLOYMENT OF THE POPULATION IN THE REGIONS OF LATVIA

Summary/Abstract: The Republic of Latvia is divided into four historical regions. The capital of Latvia – Riga is the most economically developed and largest industrial centre. The income of many rural regions of Vidzeme, Zemgale and Kurzeme is approximately € 550 per person, while in Latgale it does not reach € 450. Self-employment in the modern economy is not only a way to reduce the unemployment rate, but also one of the ways to solve the socio-economic problems of the population. The objective of the research is to establish the degree of influence of various factors characterising the self-employment of the population in the regions of Latvia on the main socio-economic indicators of the population’s life. The novelty of the research lies in the fact that for the first time a comparison and analysis of the factors characterising the self-employment of the population in different regions of Latvia have been performed. The research methods include the analysis of statistical data of the State Revenue Service (SRS) and of the Central Statistical Bureau of Latvia (CSB) using multidimensional scaling. The income of people self-employed in the regions and the taxes derived from it are important statistical indicators related to the employment of people. The research also uses indicators of income and taxes per self-employed taxpayer in each region to compare and analyse the self-employment of the population. A distance model of the Euclidean distances has been constructed. The main indicator of the accuracy of the distance model is the so-called “stress”: the smaller it is, the better the model. To assess the quality of distance models, the research also uses the Coefficient of Determination (RSQ). The analysis of the distance model has demonstrated that the factor of tax from the self-employed person is closest to the unemployment factor. To identify similarities and differences in the regions of Latvia, taking into account the main factors characterising the self-employment of the population, the model of Euclidean distances between regions in a two-dimensional space has been constructed. Riga and the region (negative pole) and Latgale region (positive pole) are located at the opposite poles of scale 1of the model. Kurzeme and Zemgale are located side by side on the distance model, which is explained by similar conditions of self-employment of the population. All five regions of Latvia differ significantly from each other in terms of the development of self-employment as an alternative to unemployment. To stop the departure of the economically active population of Latvia to countries with a higher standard of living it is necessary to develop self-employment of the population. The main factors hindering the development of self-employment of the population in Latvia and, owing to this, the reduction of unemployment are rather large taxes on employees, instability of tax policy. It is necessary to develop with the participation of the state and public organisations a program for the development of self-employment of the population.

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