The Covid-19 lockdown in the United Kingdom and subjective well-being: Have the self-employed suffered more due to hours and income reductions?

Abstract

It is well documented that the self-employed experience higher levels of happiness than waged employees even when their incomes are lower. Given the UK government’s asymmetric treatment of waged workers and the self-employed, we use a unique Covid-19 period data set which covers the months leading up to the March lockdown and the months just after to assess three aspects of the Covid-19 crisis on the self-employed: hours of work reductions, the associated income reductions and the effects of both on subjective well-being. Our findings show the large and disproportionate reductions in hours and income for the self-employed directly contributed to a deterioration in their levels of subjective well-being compared to waged workers. It appears that their resilience was broken when faced with the reality of dealing with rare events, particularly when the UK welfare support response was asymmetric and favouring waged employees.