Employment Transitions among the self-employed during the Great Recession

Julia Beckhusen

No 170114, 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota from Agricultural and Applied Economics Association

Abstract: Entrepreneurs base their decision to start a business on a range of factors, from age, education and assets to macroeconomic conditions. While the majority of these factors have a well-understood impact on entering and exiting self-employment, the effect of macroeconomic conditions is less clear. During periods of recession, self-employment may increase due to its attractiveness as an alternative to unemployment. However, the difficulty of maintaining a business through the downturn can lead to a decrease in the self-employed. Understanding the transitions in and out of self-employment would help us better appreciate how entrepreneurs experience recessions. We use a robust set of longitudinal data from the Survey of Income and Program Participation (SIPP) to analyze the movements between self-employment, unemployment and wage-work during the Great Recession. The results suggest that the probability of entering self-employment depends on characteristics of the individual while movements out of self-employment are contingent on characteristics of the business. Furthermore, transitions from unemployment to self-employment increased during the recession months and transitions from self-employment to wage-work increased in the post recession months.

Keywords: Labor and Human Capital; Public Economics (search for similar items in EconPapers)
Pages: 26
Date: 2014-05
New Economics Papers: this item is included in nep-ent and nep-iue
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea14:170114

DOI: 10.22004/ag.econ.170114

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