Computerization and the Decline of Unincorporated Self-Employment

Zexuan Liu, Sunhyung Lee and Yao-Yu Chih

Journal of Human Capital, 2025, vol. 19, issue 4, 685 - 742

Abstract: We investigate the effect of the computer adoption rate, referred to as computerization, on the proportion of unincorporated self-employed individuals within the US labor markets. The conceptual framework suggests that computerization may either augment or diminish this share. Employing a Bartik instrument approach, we disentangle the causal effect of computerization on unincorporated self-employment from 1990 to 2010. Our empirical findings indicate that a 1% increase in computerization corresponds to a 0.79% reduction in the share of unincorporated self-employed individuals. Notably, these estimates exhibit variations across industries and metropolitan areas.

Date: 2025
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