Labor market transitions and self-employment

Ellen Rissman

No WP-07-14, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: The self-employed are a heterogeneous group. Some are self-employed because they are good at it, while others are self-employed because they cannot find a better paying salaried job. Data from the CPS for prime age males show that workers are almost twice as likely to enter self-employment from unemployment as from paid employment. Furthermore, almost 22% of workers exit self-employment within the year with most returning to paid employment. This paper develops a framework for examining transitions between the labor market states of unemployment, paid employment, and self-employment. The self-employed fall into two groups: those who continue to seek paid employment in the wage and salary sector and those whose value from self-employment exceeds the expected value from continued search. The calibrated model is used to examine the effects of business startup costs on labor market transition rates. Doubling startup costs has very little impact on these rates.

Keywords: Labor market; Self-employed (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-ent and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.chicagofed.org/digital_assets/publicati ... s/2007/wp2007_14.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhwp:wp-07-14

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese ().