Self-employment and allostatic load

Self-employment can be stressful and its long-term effects on individual health could be significant; yet, the physiological outcomes of self-employment related stress remain under-explored. Drawing on allostatic load as a long-term biological consequence of physiological wear-and-tear and an indicator of stress response, we use three different studies to provide a more nuanced understanding of the relationship between self-employment and physiological outcomes. In Study 1, based on a sample of 194 self-employed and 1511 employed individuals, we find that self-employment is marginally related to allostatic load and allostatic load marginally mediates the relationship between self-employment and physical, but not mental, health. Study 2, based on a sample of 776 self-employed and 8003 employed individuals, extends these findings, and provides evidence that those who are self-employed for longer periods have a higher allostatic load. Finally, in Study 3 we draw on a sample of 174 twins and, consistent with Study 2, show that those reporting self-employment in two waves (about eight years apart) had a higher allostatic load, however, when leveraging problem-focused coping such individuals experienced lower allostatic load. Taken together, these three studies extend our understanding of the relationship between self-employment and wellbeing.     

Black–White gap in self-employment. Does intra-race heterogeneity exist?

Past research on the determinants of self-employment in the United States has emphasized the importance of ethnicity. In particular, self-employment rates for Blacks lag far behind those of other racial groups for comparable individuals. This research examines two related issues: Does the dummy variable coefficient associated with the Black–White self-employment gap exhibit intra-race heterogeneity? Second, does this variable have diminished or increased impact across generations? We decompose the sample into subgroups and find that the size of the Black–White self-employment gap varies within subgroups of African-Americans.     

Push and pull factors and Hispanic self-employment in the USA

This study examines the main push and pull factors driving Hispanic self-employment in the USA by modeling the self-employment decision as a function of sectoral earnings differences, country of origin, and other factors. Findings indicate that a main reason Hispanics engage in self-employment is they can earn more working for themselves than in wage/salary work. Immigrants appear to be pushed into self-employment as a result of limited opportunities in the wage work sector. Although low relative earnings in wage/salary work could push workers with limited English proficiency into self-employment, our findings indicate barriers to this. Results suggest that workers pulled into self-employment are those with more work experience and a college degree. Workers who originate from Southern South America and Colombia have relatively high self-employment rates, while Mexico-origin workers have relatively low self-employment rates. We also uncover differences across Hispanic origin groups in terms of the influence of gender, education, and personal wealth on self-employment participation.     

Determinants of self-employment survival in Europe

This paper investigates the determinants of self-employment survival in Europe in two stages. The first one focuses on the effect of variables at the individual level, while the second raises questions regarding specific regional factors through the introduction of macro variables. In conducting this analysis, discrete choice models, including both single and competing risks frameworks, are applied to data drawn from the European Community Household Panel from 1994 to 2001. Different destination states are considered: paid employment, unemployment and inactivity. This allows us to search for the underlying determinants of these different hazards. The results suggest a positive impact on survival of formal education and previous experience within the labour market. In addition, we find that entering self-employment from unemployment has a strong negative effect on survival within self-employment. However, our results also show that the expenditure on start-up subsidies decreases the risk of exiting self-employment specifically for the group of individuals entering self-employment from unemployment. Therefore, the availability of these incentives might be seen by policymakers as not only a route to increase entry into self-employment, but also as an adequate instrument for equalising survival chances across individuals entering self-employment from unemployment and those entering with a different starting status.     

Does unemployment lead to self-employment?

The currently burgeoning literature on the nature of and the causes for the recent reverse in the downward trend in self-employment in many developed economies, contains a somewhat inconclusive debate on the relationship between unemployment and self-employment, and whether self-employment fluctuates pro- or countercyclically. This paper reviews this literature, presents some recent evidence for EC countries, and argues that the approach in the previous research of searching for relationships between unemployment and self-employment stocks is fundamentally inappropriate. A new approach, based on an analysis of inflows to and outflows from self-employment, is called for.I would like to thank Steve Johnson, Günther Schmid, David Storey and an anonymous referee for helpful comments and suggestions on an earlier draft of the paper.     

The Entry and Exit Dynamics of Self-Employment in Canada

This paper documents the extent and cyclicality of self-employment entry and exit flows; explores transitions to and from self-employment; and investigates the influence of individual characteristics and labor market experience as well as macroeconomic conditions on the probability of moving into or out of self-employment.The self-employed sector now employs over two and a half million Canadian workers, has expanded on average by over 4% in the 1990s and accounted for over three out of every four new jobs the economy has created. There are substantial flows both into and out of self-employment over the last 15 years. Gross flows into and out of self-employment averaged nearly half a million per year between 1982 and 1994, amounting to 42% of the total self-employed population.Regression results reveal no statistical evidence supporting the dominance of the push hypothesis over the pull hypothesis – the notion that people are increasingly pushed into self-employment by deteriorating economic conditions. This analysis is done both through time-series analysis and the analysis of the determinants of flows into (and out of) self-employment. As in paid employment, younger Canadians are subject to higher turnover in self-employment – they are not only more likely to enter but also substantially more likely to leave self-employment. Prior paid-employment experience and prior self-employment experience are both found to be associated with a higher likelihood of entering self-employment. The longer one is self-employed, the less likely he/she is going to leave the business. Having a spouse in business (being self-employed) substantially increases the likelihood of the other spouse becoming self-employed – a self-employed spouse often attracts the other to either join the family business or start their own. We also find evidence that steady family income through paid-employment from one spouse increases the self-employed's (the other spouse's) affordability to continue with the business venture and hence reduces the likelihood of leaving self-employment.     

Youth Self Employment: Its Nature and Consequences

This paper examines the extent of self-employment, characteristics of the self-employed, and the returns to self-employment experiences for a sample of teenagers and young adults in the United States. Using data from the National Longitudinal Survey of Youth, we find that the self-employment experience of youth is quite different from that of adults. Consequences of youth self-employment, measured at age 27, suggest both positive and negative effects.     

The determinants of changes in U.S. self-employment, 1968–1987

Summary The self-employment rate depends on the distribution of full-time workers across ages, educational levels, and industries and on tax rates and business conditions. About 90 percent of the variation in self-employment across time and across age groups is explained by these factors. Swings in the self-employment rate over time result from the interplay of changes in these factors. The entry of the baby-boom generation into the labor-force beginning in the later 1960s has led to a decrease in the average age of the full-time nonagricultural workforce and has tended to decrease the self-employment rate. The secular decline of manufacturing, the secular rise of services, and secular increases in educational levels have tended to increase the self-employment rate. Fluctuations in business conditions and tax rates have also affected the self-employment rate. The evidence reported here suggests that self-employment is procyclical, although not strongly so. Increases in effective federal income during the late 1970s tended to increase self-employment rates while decreases during the Reagan years tended to decrease self-employment rates.These findings are helpful for speculating about the answers to three important questions. First, are people more entrepreneurial than they used to be? The fact that the ebb and flow of self-employment over time can be explained almost entirely by structural changes in the economy suggests that people with given demographic characteristics and morking in particular industries have not become more likely to try entrepreneurship²⁸.Second, did the supply of entrepreneurs increase during the Reagan years? The answer is yes and no²⁹. The number of people who operate full-time businesses has certainly increased: from 5.99 million in 1981 to 6.46 million in 1985. The absolute supply of entrepreneurs has risen. But the number of people who are full-time wage workers has also increased: from 65.2 million in 1981 to 71.6 million in 1985. The fraction of workers who operate businesses has fallen: it increased from 9.3 percent in 1981 to a peak of 10.0 percent in 1983 and then fell to 9.1 percent in 1985. The relative supply of entrepreneurs has thus fallen. Ironically, one of the many causes for the decline in the relative supply of entrepreneurs was the decrease in tax rates that were, according to supply-side advocates, supposed to have increased entrepreneurship³⁰.Third, will we see rising or falling self-employment in the coming decade? Predicting future rates of self-employment is treacherous because these rates depend upon many factors. The aging of the baby-boom generation will by itself lead to sharply increasing rates of self-employment as the baby-boomers, who started turning 40 in 1985, pass through the peak years of self-employment. This upward trend may be offset by a number of more fragile structural changes in the economy. The sharp decline of the dollar may reinvigorate manufacturing at the expense of services. If so, self-employment will decline. Further lowering of federal income tax rates may reduce the gains from tax-avoidance through self-employment and thereby impart a further downward trend in self-employment rates. Other changes that have helped increase self-employment may have run their course. Female labor-force participation rates and educational levels among both men and women may have reached a plateau. If so, these factors will cease to be a factor in changing self-employment rates.This paper has analyzed the determinants of changes in the aggregate rate of self-employment across age cohorts. When examining aggregate rates of self-employment we have ignored more subtle questions concerning why particular individuals choose to try self-employment at particular times in their careers and what makes a successful entrepreneur. These questions await future research.We would like to thank Jules Lichtenstein and Edward Starr for helpful comments and suggestions.     

Intergenerational transmissions in immigrant self-employment: Evidence from three generations

This paper presents the first study of intergenerational transmissions in immigrant self-employment across three generations. Based on a Swedish data set, the results show that having a self-employed father, as well as having a self-employed grandfather, has a positive effect on self-employment propensities for male third-generation immigrants. For native Swedes having a self-employed father is of importance for self-employment propensities, while having a self-employed grandfather is not. Evidently, there appears to be a generational link in self-employment across three generations for immigrants, but not for natives. Since immigrants transfer general self-employment abilities, third-generation immigrants with self-employed ancestors are over-represented in self-employment. Many of them, however, are not necessarily in the same business line as their fathers. In contrast, when natives transfer general self-employment abilities, their offspring tend to become self-employed in the same business line as their fathers.     

Dependent self-employment as a way to evade employment protection legislation

This paper examines whether the strictness of employment protection legislation encourages employers to contract out work to their own paid employees by the formula of dependent self-employment, while making transitions to independent self-employment less likely by altering the relative valuation of risk between salaried work and self-employment in favour of the former. In conducting this analysis, discrete choice models are applied to data drawn from the European Community Household Panel from 1994 to 2001. To test the hypotheses, a tentative individual measure of the potential severance payment that a worker would receive in the case of dismissal is included as well as aggregated variables that try to capture differences in labour market institutions and macroeconomic conditions. Evidence for a positive impact of the strictness of employment protection legislation and the potential severance payment on transitions to dependent self-employment is found. The opposite effects, however, are detected for individuals becoming independent self-employed.     

Self-employment: the role of intellectual property right laws

Little is known about the impact of intellectual property rights (IPRs) on typically imitative self-employment. IPR laws have contrasting dual innovation creation and access effects on self-employment activity. The first effect is positive where strong IPR laws promote innovation and so create new opportunities for self-employment. The second effect is negative where strong IPR laws restrict access to innovation and technology used as inputs to self-employed businesses. Using a 33-country dataset over the period 1995?C2000, we estimate the impact of IPR laws on self-employment, helping to fill the vacuum of empirical evidence that has plagued policy decision making in this area. We find that patent activity has a negative effect on self-employment. However, overall, we find that more extensive and strong IPR laws have a net positive effect on self-employment activity.     

The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?

This paper uses a state of the art three-stage estimation technique to identify the determinants of the self-employed immigrant and native men in Germany. Their making is surprisingly alike. Employing data from the German Socioeconomic Panel 2000 (GSOEP) release we find that self-employment is not significantly affected by exposure to Germany or by human capital. But this choice has a very strong intergenerational link and it is also related to homeownership and financial worries. While individuals are strongly pulled into self-employment if it offers higher earnings, immigrants are additionally pushed into self-employment when they feel discriminated. Married immigrants are more likely to go into self-employment, but less likely when they have young children. Immigrants with foreign passports living in ethnic households are more likely self-employed than native Germans. The earnings of self-employed men increase with exposure to Germany, hours worked and occupational prestige; they decrease with high regional unemployment to vacancies ratios. Everything else equal, the earnings of self-employed Germans are not much different from the earnings of the self-employed immigrants, including those who have become German citizens. However, immigrants suffer a strong earnings penalty if they feel discriminated against while they receive a premium if they are German educated.     

Gender and field of study as determinants of self-employment

This article concentrates on gender differences among university graduates with respect to self-employment. We investigate the characteristics of self-employed men and women, focusing in particular on the contribution of field of study as a determinant of the gender gap in self-employment rates. Our approach is based on probit regressions and on the application of a non-linear decomposition technique to the gender gap in self-employment. We find that age and field of study account for two-thirds of the observed gender gap in self-employment.     

The experience of the founder and self-employment duration: a comparative advantage approach

This paper investigates how the initial experience of a founder affects self-employment duration in a competing risks setting. The analysis uses survey data that provide new perspectives on the role of the founder??s experience. The analysis concentrates on the importance of a balanced skill set for self-employment duration. The results show that most self-employed individuals find themselves unemployed upon ending their self-employment. Firm-level characteristics are less significant in explaining self-employment duration, while experience and motivation appear to be driving forces for self-employment longevity. The findings support the importance of combined practical experience and adequate skills. Having broad experience combined with competence in sales/business is one of the most important factors for self-employment duration. Contrary to most other studies, the results show that previous self-employment experience is associated with early exits.     

A longitudinal analysis of the young self-employed in Australia and the United States

This paper examines the pattern of self-employment in Australia and the United States. We particularly focus on the movement of young people in and out of self-employment using comparable longitudinal data from the two countries. We find that the forces that influence whether a person becomes self-employed are broadly similar: in both countries skilled manual workers, males and older workers were particularly likely to move to self-employment. We also find that previous firm size, previous union status and previous earnings are important determinants of transitions to self-employment. The main difference we observe is that additional years of schooling had a positive impact on the probability of being self-employed in the US but were not a significant influence in Australia. However, the factors influencing the probability of leaving self-employment are different across the two countries.     

New business start-up and subsequent entry into self-employment

The present research focuses upon new businesses which are started from scratch. The theories of reasoned action and planned behavior are used to formulate hypotheses concerning self-employment intentions and subsequent entry into self-employment. The hypotheses are tested using longitudinal data from 297 Norwegian business founders. The results suggest that salient beliefs concerning self-employment determine attitudes toward self-employment, that attitude and subjective norm determine intentions to become self-employed, and that intentions to become self-employed determine actual entry into self-employment. The findings strongly support the theory of reasoned action, but provide no support for the extension of the theory represented by the theory of planned behavior.     

Is self-employment really a bad experience? : The effects of previous self-employment on subsequent wage-employment wages

We use propensity score matching methods to quantify the effects of past self-employment experience on subsequent earnings in dependent employment using data on the population of Danish men observed between 1990 and 1996. Our results generally confirm existing studies in that we find that a spell of self-employment is associated with lower hourly wages compared to workers who were consecutively wage-employed. We also show, however, that this effect disappears—and even becomes positive in some settings—for formerly self-employed who find dependent employment in the same sector as their self-employment sector. Hence, the on average negative effect of self-employment is rather caused by sector switching than by the self-employment experience per se. Moreover, formerly self-employed who either enjoyed a high income or hired at least one worker during their self-employment spell receive wages in subsequent dependent employment that are at least as high as for individuals who have been consecutively wage-employed.     

Self-Employment Status: The Role of State Dependence and Initial Circumstances

This paper uses British longitudinal data to model self-employment status. In contrast to previous studies, the modelling approach accounts for state-dependence and unexplained heterogeneity effects. The paper concludes that state dependence is an important influence on self-employment choice. Someone self-employed last year is, controlling for observable and unobservable influences, 30 percentage points more likely to be self-employed this year than someone who was in paid employment a year ago. We also find significant individual heterogeneity in the probability of self-employment, with significant explained influences operating through gender, educational attainment, occupation, spouse's self-employment, and parental and educational background. Significant, though quantitatively smaller influences come though initial financial circumstance and current house price movements. Local labour market shocks do not appear significantly to influence self-employment choice. This we conclude that the autoregressive nature of self-employment time-series would appear to be a structural rather than a cyclical phenomenon.     

Racial differences in self-employment exits

Using detailed work history data in the 1979 National Longitudinal Survey of Youth, I investigate the reasons behind the racial gap in self-employment. My analysis of an “age uniform” sample of men, all of whom are observed from age 22 to 40 years, reveals that racial differences in cross-sectional self-employment rates are largely due to the fact that minority workers’ self-employment spells are relatively short-lived. Moreover, I find that minority workers’ relatively high exit rates are driven primarily by transitions to nonemployment. Estimates from a multinomial logit model of self-employment exits suggest that minority workers’ weak attachment to the labor market prior to entering self-employment is an important determinant of their transition from self-employment to nonemployment, while lack of prior industry and self-employment experience contributes to minorities’ transitions to wage employment. When I assign blacks and Hispanics the same (mean) work histories as whites, the predicted black–white gap in the first-year self-employment survival rate decreases by 31% and the Hispanic–white gap decreases by 14%.     

Patterns of ethnic self-employment in time and space: evidence from British Census microdata

The over-representation of certain ethnic minority and immigrant groups in self-employment is, in common with other developed countries, a notable feature of the UK labour market. Compared to the substantial growth in self-employment in the 1980s, the 1990s saw overall self-employment rates plateau. Despite this, some minority groups experienced continued growth whilst others, particularly Chinese and Indian males and Pakistani, Bangladeshi and Chinese females, saw their self-employment rates decline. In this paper we use microdata samples from the 1991 and 2001 Censuses to investigate the dynamic and spatial patterns of ethnic entrepreneurship. Using decomposition methods we find that, for males from the Asian groups, changes in observable characteristics associated with an increasing proportion of second-generation individuals explain much of the decline in self-employment. This, which is also true of Chinese females, reflects in part the age structure and educational experiences of the second generation. The dynamics of Black male and Pakistani/Bangladeshi male and female entrepreneurship are less easy to explain. We also find that, while there is no evidence of self-employment being an “enclave” phenomenon, local economic conditions do affect rates of entrepreneurship for some groups, notably Pakistanis and Bangladeshis.