This paper provides a new perspective on the role of housing in economic geography and thus advances knowledge of the interrelationship between housing and economic systems. It shows, for the first time, how people’s housing choices are shaping their decision to become self-employed and that home-based self-employment has distinct features. Different mechanisms how housing can influence people’s self-employment decisions are theoretically derived and tested using longitudinal microdata for the UK. In particular, and advancing existing empirical studies, it controls for endogeneity of housing to self-employment using a novel technique from health research.

This paper makes two novel contributions to economic geography and planning. First, it studies microbusinesses (those employing less than ten staff) including those that are based in the owner’s home which have been ignored in developed country contexts. Second, it links hitherto disconnected literatures in economic geography/ management and urban/neighbourhood studies and develops a concept of local resources for microbusinesses. It explores empirically the relevance of local resources for microbusinesses over the business cycle which have been overlooked in existing literatures. It uses a random sample of microbusinesses that includes informal (hidden) businesses. It enhances the dataset through data linkage with small-area census data.