Responsibility or autonomy: children and the probability of self-employment in the USA

Gustavo Caballero Orozco ()

Small Business Economics, 2017, vol. 49, issue 2, No 12, 493-512

Abstract: Abstract This paper studies the effect of children on the likelihood of self-employment. Having children can change preferences that are central to the decision whether to be self-employed. On the one hand, individuals’ preference for autonomy and flexibility increases when having children, which increases the willingness to be self-employed. On the other hand, having children entails a responsibility over someone else, which increases individual risk aversion and decreases the willingness to be self-employed. Using a pooled cross section of 26 years from the General Social Survey, instrumental variable estimates indicate that, in the USA, having children under the age of 18 in the household decreases the likelihood of being self-employed by 11 % (i.e., the responsibility effect dominates). This effect is considerable as a child decreases the probability of self-employment more than the increase associated with being raised by a self-employed father—one of the main determinants of self-employment.

Keywords: Children; Occupational choice; Preference for autonomy; Risk preferences; Self-employment (search for similar items in EconPapers)
JEL-codes: D81 J13 J16 L26 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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DOI: 10.1007/s11187-017-9840-3

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