Independent work: choice, necessity, and the gig economy


Comparison of respondents’ education levels across countries



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Independent-Work-Choice-necessity-and-the-gig-economy-Full-report

Comparison of respondents’ education levels across countries


105
McKinsey Global Institute
Independent work: Choice, necessity, and the gig economy
Classification of independent workers in our survey
Since we are taking a broader view of independent work than what is typically understood 
by terms such as “freelancing” or “self-employment,” we decided not to ask our survey 
respondents to self-identify as either traditional or independent. Instead, we asked 
questions probing the nature of the work itself to look for indicators typically associated with 
independent work. We use the answers to classify each respondent ourselves. Naturally, 
the logic is different for each of the three groups of independent workers we have included: 
those providing services, selling goods, and leasing assets. 
To evaluate whether a person engages in independent work by providing labor, we asked 
respondents to describe up to three jobs or income-earning activities as well as a set of 
detailed follow-up questions for each activity they listed. We then applied the classification 
tree to each activity separately to see if it qualifies as “independent.” This classification tree 
shown in Exhibit A5 is based on the conceptual definition of independent work detailed in 
Chapter 1, but it is not meant to expand on it or supersede it. It is specific to the way our 
survey was designed, and its purpose is to relate the general concept of independent work 
to observable data.
 
ƒ
The first criterion tested was the length of contract for temporary workers. We 
considered a job independent as long as the contract duration was 11 months or less. 
 
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For temporary workers on contracts of 12 months or more and those not on fixed-term 
contracts at all, we looked at the way their income was structured and excluded all those 
who received a fixed salary. We only considered jobs that pay by task, by hour, or by the 
volume of sales made. 
 
ƒ
Next, we looked at respondents’ ability to decide how many hours they want to work and 
their degree of schedule flexibility. In order to be considered “independent,” a person 
must either have “complete flexibility” with regard to hours, or both have “some flexibility 
[on hours while having to] align with other” and have “complete flexibility” or “no time 
constraints” in scheduling when they work those hours.
Note that all the criteria were applied sequentially. For example, once a job qualified as 
independent due to being a short-term temporary contract, it no longer needs to satisfy any 
of the subsequent checks.
In the case of selling good or leasing assets, we designed the classification logic to filter out 
people who sold goods or leased assets on a strictly one-off basis (such as those who sold 
their used furniture when moving apartments). We also filtered out people for whom leasing 
assets is a passive source of income with limited ongoing involvement (such as landlords 
with tenants on stable long-term leases). Therefore, we only consider selling goods to be 
“independent work” if the respondent sold items they made themselves or bought purely 
for resale on at least 10 occasions in the past year. In the case of selling used goods, we 
applied a stricter cut-off by requiring at least 10 occasions for the selling of used goods 
alone. Similarly, we only consider people who reported making income from leasing to be 
independent if they lease assets more often than once a year for an average duration of less 
than six months.
We acknowledge that some of the specific cut-offs we used to classify work as independent 
are subjective judgment calls. This is due in part to the inherent limitations of survey-based 
data collection. In order to check the robustness of the classification logic (and thus our 
sizing estimate), we ran a series of sensitivity tests to see how the overall estimate changes 
in response to shifting some of these parameters. 


106
McKinsey Global Institute
Appendix: Technical notes 
The specific scenarios included: 1) not considering the length of contract for temporary 
workers, but instead only considering the characteristics of their job; 2) classifying all jobs 
with a fixed salary as traditional regardless of the length of the relationship; 3) both slightly 
stricter and looser requirements on the flexibility people report in order for an activity to be 
independent; 4) excluding sellers who only sold used goods as opposed to manufactured 
goods or goods purely for resale; 5) including everyone who leased assets regardless of the 
duration or frequency; and several others. Overall, we found the estimate to be fairly robust, 
with the largest impact on the estimated size of the independent workforce usually being 
around ±10 to 20 percent, depending on the country.

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