Differences in Self-employment Duration by Year of Entry & Pre-entry

Adela Luque and Maggie R. Jones

CARRA Working Papers from Center for Economic Studies, U.S. Census Bureau

Abstract: Self-employment is associated with entrepreneurship and a motivation to pursue an opportunity. Previous research indicates that people also become self-employed because of limited opportunities in the wage sector. Using a unique set of data that links the American Community Survey to Form 1040 and W-2 records, this paper extends the existing literature by examining self-employment duration for five consecutive entry cohorts, including two cohorts who entered self-employment during the Great Recession. Severely limited labor market opportunities may have driven many in the recession cohorts to enter self-employment, while those entering self-employment during the boom may have been pursuing opportunities under favorable market conditions. To more explicitly test the concept of "necessity" versus "opportunity" self-employment, we also examine the pre-entry wage labor attachment of entrants. Specifically, we ask whether an association exists between wage labor attachment and the duration of self-employment. We also explore whether the demographic/socio-economic characteristics and self-employment exit behavior of the cohorts are different, and if so, how. We find evidence consistent with the existence of "necessity" vs. "opportunity" self-employment types.

Date: 2016-11
New Economics Papers: this item is included in nep-ent and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:cen:cpaper:2016-09

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