number of variables including personal, household and location characteristics as control variables and the log of disposable income per capita as the explanatory variable.<sup>22</sup> Results are shown in table 4.6. We can see that income is very significant and a positive variable explaining stayers in the wage category versus those that moved from wage to non-wage labor (col 1). This would suggest that staying in wage labor 'pays' better. In fact, we calculated the premium earned by moving from wage to non-wage employment and found a value of (-) 2.2%. In other words, those who moved have - on average - a disposable income 2.2% lower than those who stayed in wage labor.

Vice-versa, income is not a significant variable that distinguishes stayers in the non wage category from those who moved from the non wage category to the wage category (col. 2). In this case, the premium paid for moving into the wage category is (+)1.9% suggesting that moving into the wage category from the non wage category pays off. We can also note that all other variables which we used as control variables are in fact all significant and could potentially be explanatory variables themselves. Premiums for moving and not moving are small and the decision to move may be more related to non-income factors. However, the conclusion we have to draw from the probit regressions is that disposable income is not what is attracting workers into individual farming.

In sum, the flow from wage (employees) to non wage (self-employed) workers has increased during the 1990-1996 deep recession, continued during the 1998-1999 moderate recession and was still visible during the 2000-2002 growth period.<sup>23</sup> Our micro data for Moldova have fully supported in this respect the macro data we showed for the CIS-7 and provided by CIS-Stat. From the probit regressions on stayers and movers we concluded that disposable income is not what is attracting workers into individual farming. By default, we have to conclude that other factors have been at work.

Possibly, self-employment during the recession phase can be understood as a combination of structural reforms (privatization) and as an escape from unemployment and poverty. The Schumpeterian entrepreneur was rare among the self-employed. We did not find evidence that selfemployment constituted a springboard to SMEs creation. It is rather the dismantling of collective agriculture and the lack of growth in agricultural and non-agricultural enterprises that is still pushing people into individual farming contributing to explaining these trends.

Past research on Kazakhstan has shown two aspects that could further support these conclusions.<sup>24</sup> One is that poverty among the self-employed was found to be much higher than poverty among the employees at the end of the recessional period in 1996 suggesting that selfemployment could hardly be considered an attractive status for the employees. And the second is that when employment in the formal sector started to expand in 2002, self-employment rather than unemployment has constituted the recruitment ground for enterprises. Many of the selfemployed were evidently in the waiting for a better opportunity to join the employees and remained constrained for many years in the subsistence self-employment 'trap'. While in Kazakhstan some signs of revival in the industrial manufacturing sector are visible, this phenomenon is still not happening in the CIS-7.

> 22 We do not use the wage as explanatory variable because the variable is not provided in the sample but also because disposable income is a much better indicator to compare non-wage with wage workers.

> 23 Transition probabilities were also calculated for the entire samples, including non panel observations. Results were very close in size and the described trends almost identical indicating that the households panel is not a significantly different sample from the entire longitudinal sample, at least in relation to the transition probabilities. 24 Verme (2000) and (2001)

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