Abstract
We investigated gender differences in self-employment earnings for US Millennials, and whether differences could be attributed to individual characteristics, business characteristics, or factors related to household formation, such as marriage and parenthood. Using a nationally representative dataset of US youth, we found significant earnings differences favoring men and suggestive evidence of a “motherhood earnings penalty” (Budig and England 2001, p. 204–225). After controlling for business characteristics, however, the effect of gender itself was not statistically significant and the effect of motherhood only approached statistical significance, suggesting that gendered choices and paths explain earnings differences, not gender or motherhood per se. Future work would benefit from a larger dataset and should explore the role of work location and education in earnings.
Similar content being viewed by others
References
Abroms, L. C., & Goldscheider, F. K. (2002). More work for mother: How spouses, cohabiting partners and relatives affect the hours mothers work. Journal of Family and Economic Issues, 23(2), 147–166. doi:10.1023/A:1015786600645.
American Community Survey (2012). American Community Survey 1-Year Estimates 2012, Table S2002. US Census Bureau. Retrieved from American FactFinder, http://factfinder2.census.gov.
Anderson, D. J., Binder, M., & Krause, K. (2002). The motherhood wage penalty: Which mothers pay it and why? American Economic Review, 92(2), 354–358. doi:10.1257/000282802320191606.
Astone, N. M., Dariotis, J. K., Sonenstein, F. L., Pleck, J. H., & Hynes, K. (2010). Men’s work efforts and the transition to fatherhood. Journal of Family and Economic Issues, 31(1), 3–13. doi:10.1007/s10834-009-9174-7.
Ayres, S. (2013). The high cost of youth unemployment. Retrieved from https://www.americanprogress.org/issues/labor/report/2013/04/05/59428/the-high-cost-of-youth-unemployment/.
Baines, S., & Gelder, U. (2003). What is family friendly about the workplace in the home? The case of self-employed parents and their children. New Technology, Work and Employment, 18(3), 223–234. doi:10.1111/1468-005X.00123.
Becker, G. S. (1985). Human capital, effort, and the sexual division of labor. Journal of Labor Economics, 3(1), S33–S58. doi:10.2307/2534997.
Becker, G. S. (1991). A treatise on the family. Cambridge: Harvard University Press.
Berke, D. L. (2003). Coming home again: The challenges and rewards of home-based self-employment. Journal of Family Issues, 24(4), 513–546. doi:10.1177/0192513x02250754.
Berlin, G., Furstenberg, F. F, Jr, & Waters, M. C. (2010). Introducing the issue. The Future of Children, 20(1), 3–18. doi:10.2307/27795057.
Bianchi, S. M., Sayer, L. C., Milkie, M. A., & Robinson, J. P. (2012). Housework: Who did, does or will do it, and how much does it matter? Social Forces, 91(1), 55–63. doi:10.1093/sf/sos120.
Blanchflower, D. F., & Meyer, B. D. (1994). A longitudinal analysis of the young self-employed in Australia and the United States. Small Business Economics, 6(1), 1–13. doi:10.1007/BF01066108.
Bregger, J. E. (1996). Measuring self-employment in the United States. Monthly Labor Review, 119(1/2), 3–9. Retrieved from http://www.bls.gov/mlr/1996/01/art1full.pdf.
Budig, M. J. (2006a). Gender, self-employment, and earnings: The interlocking structures of family and professional status. Gender and Society, 20(6), 725–753. doi:10.2307/27640932.
Budig, M. J. (2006b). Intersections on the road to self-employment: gender, family and occupational class. Social Forces, 84(4), 2223–2239. doi:10.2307/3844497.
Budig, M. J., & England, P. (2001). The wage penalty for motherhood. American Sociological Review, 66(2), 204–225. doi:10.2307/2657415.
Budig, M. J., & Hodges, M. J. (2010). Differences in disadvantage: Variation in the motherhood penalty across white women’s earnings distribution. American Sociological Review, 75(5), 705–728. doi:10.2307/20799486.
Bureau of Labor Statistics. (2011). The Employment Situation—January 2011 (USDL-11-0129). Retrieved from http://www.bls.gov/news.release/archives/empsit_02042011.pdf.
Bureau of Labor Statistics. (2013). National Occupational Employment and Wage Estimates. Retrieved from http://www.bls.gov/oes/2013/may/oes_nat.htm#31-0000.
Caputo, R. K., & Dolinsky, A. (1998). Women’s choice to pursue self- employment: The role of financial and human capital of household members. Journal of Small Business Management, 36(3), 8–17.
Carter, S. (2011). The rewards of entrepreneurship: Exploring the incomes, wealth and economic well-being of entrepreneurial households. Entrepreneurship Theory and Practice, 35(1), 39–55. doi:10.1111/j.1540-6520.2010.00422.x.
Cherlin, A. J. (2004). The deinstitutionalization of American marriage. Journal of Marriage and Family, 66(4), 848–861. doi:10.2307/3600162.
Connelly, R. (1992). Self-employment and providing child care. Demography, 29(1), 17–29. doi:10.2307/2061360.
Coontz, S. (2010). Why American families need the census. Annals of the American Academy of Political and Social Science, 631, 141–149. doi:10.2307/20744016.
Correll, S.J., Benard, S., & Paik, I. (2007). Getting a job: Is there a motherhood penalty? American Journal of Sociology, 112(5), 1297–1339. Retrieved from http://www.jstor.org/stable/10.1086/511799.
Craig, L., Powell, A., & Cortis, N. (2012). Self-employment, work-family time and the gender division of labour. Work, Employment & Society, 26(5), 716–734. doi:10.1177/0950017012451642.
Danziger, S., & Ratner, D. (2010). Labor market outcomes and the transition to adulthood. The Future of Children, 20(1), 133–158. doi:10.2307/2779506.
DeMartino, R., & Barbato, R. (2003). Differences between women and men MBA entrepreneurs: exploring family flexibility and wealth creation as career motivators. Journal of Business Venturing, 18(6), 815–832. doi:10.1016/s0883-9026(03)00003-x.
Eikhof, D. R. (2012). A double-edged sword: twenty-first century workplace trends and gender equality. Gender in Management, 27(1), 7–22. doi:10.1108/17542411211199246.
Ekinsmyth, C. (2013). Managing the business of everyday life: The role of space and place in ‘mumpreneurship’. International Journal of Entrepreneurial Behavior and Research, 19(5), 525–546. doi:10.1080/0966369x.2013.817975.
Evans, D. S., & Leighton, L. S. (1989). Some empirical aspects of entrepreneurship. The American Economic Review, 79(3), 519–535. doi:10.2307/1806861.
Fairlie, R. W. (2005). Self-employment, entrepreneurship, and the NLSY79. Monthly Labor Review, 128(2), 40–47. Retrieved from http://www.bls.gov/opub/mlr/2005/02/art6full.pdf.
Fairlie, R. W., & Robb, A. M. (2009). Gender differences in business performance: Evidence from the Characteristics of Business Owners survey. Small Business Economics, 33(4), 375–395. doi:10.1007/s11187-009-9207-5.
Fairlie, R. W., & Robb, A. (2010). Disparities in capital access between minority and non-minority-owned businesses: the troubling reality of capital limitations faced by MBEs. Retreived from http://www.mbda.gov/sites/default/files/DisparitiesinCapitalAccessReport.pdf.
Furstenberg, F. F., Jr. (2010). On a new schedule: Transitions to adulthood and family change. The Future of Children, 20(1). Retrieved from http://www.jstor.org/stable/27795060.
Gangl, M., & Ziefle, A. (2009). Motherhood, labor force behavior, and women’s careers: An empirical assessment of the wage penalty for motherhood in Britain, Germany, and the United States. Demography, 46(2), 341–369. doi:10.2307/20616467.
Geobey, S. (2013). The young and the jobless: Youth unemployment in Ontario. Ottawa: Canadian Centre for Policy Alternatives. Retrieved from http://www.policyalternatives.ca/sites/default/files/uploads/publications/Ontario%20Office/2013/09/Young_and_jobless_final3.pdf.
Glauber, R. (2007). Marriage and the motherhood wage penalty among African Americans, hispanics, and whites. Journal of Marriage and Family, 69(4), 951–961. doi:10.2307/4622500.
Golden, L. (2008). Limited access: Disparities in flexible work schedules and work-at-home. Journal of Family and Economic Issues, 29(1), 86–109. doi:10.1007/s10834-007-9090-7.
Goldin, C., Katz, L. F., & Kuziemko, I. (2006). The homecoming of American college women: The reversal of the college gender gap. The Journal of Economic Perspectives, 20(4), 133–156. doi:10.2307/30033687.
Haider, S., & Solon, G. (2006). Life-cycle variation in the association between current and lifetime earnings. The American Economic Review, 96(4), 1308–1320. doi:10.2307/30034342.
Hamilton, B. H. (2000). Does entrepreneurship pay? An empirical analysis of the returns to self-employment. Journal of Political Economy, 108(3), 604–631. doi:10.1086/262131.
Harmon, C., Oosterbeek, H., & Walker, I. (2000). The returns to education: A review of evidence, issues and deficiencies in the literature. Centre for the Economics of Education Discussion Paper (5). Retrieved from http://cee.lse.ac.uk/ceedps/ceedp05.pdf.
Heckman, J.J. (1976). Estimates of a human capital production function embedded in a life-cycle model of labor supply. National Bureau of Economic Research. Retrieved from http://ideas.repec.org/h/nbr/nberch/3963.html.
Hipple, S.F. (2010). Self-employment in the United States. Monthly Labor Review, 133(9), 17–32. Retrieved from http://www.bls.gov/opub/mlr/2010/09/art2full.pdf.
Hundley, G. (2000). Male/female earnings differences in self-employment: The effects of marriage, children, and the household division of labor. Industrial and Labor Relations Review, 54(1), 95–114. doi:10.2307/2696034.
Kahn, L. B. (2010). The long-term labor market consequences of graduating from college in a bad economy. Labour Economics, 17(2), 303–316. doi:10.1016/j.labeco.2009.09.002.
Karoly, L. A., & Zissimopolous, J. (2004). Self-employment among older US workers. Monthly Labor Review, 127(7), 24–47. Retrieved from http://www.bls.gov/opub/mlr/2004/07/art3full.pdf.
Kew, J., Herrington, M., Litovsky, Y., & Gale, H. (2013). The state of global youth entrepreneurship. London: Global Entrepreneurship Monitor. Retrieved from http://www.gemconsortium.org/docs/2835/gem-ybi-youth-report-the-state-of-global-youth-entrepreneurship.
Klapper, L. F., & Parker, S. C. (2011). Gender and the business environment for new firm creation. The World Bank Research Observer 26(2), 237–257. Retrieved from http://documents.worldbank.org/curated/en/2011/08/18587669/gender-business-environment-new-firm-creation.
Kuperberg, A. (2012). Reassessing differences in work and income in cohabitation and marriage. Journal of Marriage and Family, 74(4), 688–707. doi:10.1111/j.1741-3737.2012.00993.x.
Layne, C. (2013). Changes in self-employment: 2010–2011. American Community Survey Brief 11/21. Retrieved from http://www.census.gov/prod/2013pubs/acsbr11-21.pdf .
Lechmann, D.S.J., & Schnabel, C. (2012). What explains the gender earnings gap in self-employment? A decomposition analysis with German data, Friedrich-Alexander-Universitat Discussion Papers No. 77. Retrieved from http://www.arbeitsmarkt.wiso.uni-erlangen.de/pdf/diskussionspapiere/dp77.pdf.
Lee, Y. G., Jasper, C. R., & Fitzgerald, M. A. (2010). Gender differences in perceived business success and profit growth among family business managers. Journal of Family and Economic Issues, 31(4), 458–474. doi:10.1007/s10834-010-9226-z.
Levine, R., & Rubenstein, Y. (2013). Does entrepreneurship pay? The Michael Bloombergs, the hot dog vendors, and the returns to self-employment. Working Paper: Haas School of Business. Retrieved from http://faculty.haas.berkeley.edu/ross_levine/Papers/2012_7SEP_entrepreneurship.pdf.
Light, A. (2004). Gender differences in the marriage and cohabitation income premium. Demography, 41(2), 263–284. doi:10.2307/1515166.
Loscocco, K., & Bird, S. R. (2012). Gendered paths: Why women lag behind men in small business success. Work and Occupations, 39(2), 183–219. doi:10.1177/0730888412444282.
Loscocco, K., Robinson, J., Hall, R.H., & Allen, J.K. (1991). Gender and small business success: An inquiry into women’s relative disadvantage. Social Forces, 70(1), 65–85. Retrieved from http://www.jstor.org/stable/2580062.
Loscocco, K., & Smith-Hunter, A. (2004). Women home-based business owners: insights from comparative analyses. Women in Management Review, 19(3), 164–173. doi:10.1108/09649420410529870.
Lundberg, S., & Pollak, R. A. (2007). The American family and family economics. The Journal of Economic Perspectives, 21(2), 3–26. doi:10.2307/30033715.
Lundberg, S., & Rose, E. (2000). Parenthood and the earnings of married men and women. Labour Economics, 7(6), 689–710. doi:10.1016/S0927-5371(00)00020-8.
Macpherson, D. A. (1988). Self-employment and married women. Economics Letters, 28(3), 281–284. doi:10.1016/0165-1765(88)90132-2.
Marshall, M. L., & Flaig, A. (2014). Marriage, children and self-employment earnings: An analysis of self-employed women in the US. Journal of Family and Economic Issues, 35(3), 313–322. doi:10.1007/s10834-013-9373-0.
Mincer, J. (1974). Schooling, experience and earnings. National Bureau of Economic Research. http://papers.nber.org/books/minc74-1.
Mincer, J., & Polachek, S. (1974). Family investments in human capital: Earnings of women. Journal of Political Economy, 82(2), S76–S108. doi:10.2307/1829993.
Mirchandani, K. (1999). Feminist insight on gendered work: New directions in research on women and entrepreneurship. Gender, Work and Organization, 6(4), 224–235. doi:10.1111/1468-0432.00085.
Mroz, T. A., & Savage, T. H. (2006). The long-term effects of youth unemployment. The Journal of Human Resources, 41(2), 259–293. doi:10.2307/40057276.
Noseleit, F. (2014). Female self-employment and children. Small Business Economics, 43(3), 1–21. doi:10.1007/s11187-014-9570-8.
Nsiah, C., Debeaumont, R., & Ryerson, A. (2013). Motherhood and earnings: Wage variability by major occupational category and earnings level. Journal of Family and Economic Issues, 34(2), 224–234. doi:10.1007/s10834-012-9323-2.
Pew Research Center. (2010). Millennials: A portrait of generation next. Confident. Connected. Open to change. Washington: Pew Research Center. Retrieved from http://www.pewsocialtrends.org/files/2010/10/millennials-confident-connected-open-to-change.pdf.
Pew Research Center. (2013). On pay gap, Millennial women near parity, for now: Despite gains, many see roadblocks ahead. Washington: Pew Research Center. Retrieved from http://www.pewsocialtrends.org/2013/12/11/on-pay-gap-millennial-women-near-parity-for-now/.
Reynolds, J., & Johnson, D. R. (2012). Don’t blame the babies: Work hour mismatches and the role of children. Social Forces, 91(1), 131–155. doi:10.1093/sf/sos070.
Richomme-Huet, K., Vial, V., & D’andria, A. (2013). Mumpreneurship: A new concept for an old phenomenon? International Journal of Entrepreneurship and Small Business, 19(2), 251–275. doi:10.1504/IJESB.2013.054966.
Robb, A. M., & Watson, J. (2012). Gender differences in firm performance: Evidence from new ventures in the United States. Journal of Business Venturing, 27(5), 544–558. doi:10.1016/j.jbusvent.2011.10.002.
Robinson, P. B., & Sexton, E. A. (1994). The effect of education and experience on self-employment success. Journal of Business Venturing, 9(2), 141–156. doi:10.1016/j.jbusvent.2011.10.002.
Roche, K. (2013). Reconciling gender differences in the returns to education in self-employment: Does occupation matter? The Journal of Socio-Economics, 44(C), 112–119. doi: doi:10.1016/j.socec.2013.02.022.
Sayer, L. C., England, P., Bittman, M., & Bianchi, S. M. (2009). How long is the second (plus first) shift? Gender differences in paid, unpaid, and total work time in Australia and the United States. Journal of Comparative Family Studies, 40(4), 523–545. Retrieved from http://www.jstor.org/discover/10.2307/41604549.
Schoon, I., & Duckworth, K. (2012). Who becomes an entrepreneur? Early life experiences as predictors of entrepreneurship. Developmental Psychology, 48(6), 1719–1726. doi:10.1037/a0029168.
Schwanen, T., Kwan, M.-P., & Ren, F. (2008). How fixed is fixed? Gendered rigidity of space–time constraints and geographies of everyday activities. Geoforum, 39(6), 2109–2121. doi:10.1016/j.geoforum.2008.09.002.
Sironi, M., & Furstenberg, F. F., Jr. (2012). Trends in the economic independence of young adults in the United States: 1973–2007. Population and Development Review, 38(4), 609–630. doi:10.1111/j.1728-4457.2012.00529.x.
Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374. doi:10.2307/1882010.
Sum, A., Khatiwada, I., Trubskyy, M., & Palma, S. (2014). The plummeting labor market fortunes of teens and young adults. Washington: Brookings Institution. Retrieved from http://www.brookings.edu/research/interactives/2014/labor-market-metro-areas-teens-young-adults.
Sutton, P.D., Hamilton, B.E., & Mathews, T.J. (2011). Recent decline in births in the United States, 2007–2009 (NCHS Data Brief: No. 60). Hyattsville, MD: National Center for Health Statistics. Retrieved from http://www.cdc.gov/nchs/data/databriefs/db60.htm.
UN Secretary General. (2013). Transforming unemployed youth into entrepreneurs part of solution to global crisis [Press release]. New York: United Nations. Retrieved from http://www.un.org/press/en/2013/sgsm15135.doc.htm.
Waldfogel, J. (1997). The effect of children on women’s wages. American Sociological Review, 62(2), 209–217. doi:10.2307/2657300.
Walker, J. R. (2009). Earning, effort, and work flexibility of self-employed women and men: The case of St. Croix County, Wisconsin. Journal of Labor Research, 30(3), 269–288. doi:10.1007/s12122-009-9067-4.
Wellington, A. J. (2006). Self-employment: the new solution for balancing family and career? Labour Economics, 13(3), 357–386. doi:10.1016/j.labeco.2004.10.005.
Wickrama, K. A. S., Simons, L. G., & Baltimore, D. (2012). The influence of ethnicity and adverse life experiences during adolescence on young adult socioeconomic attainment: The moderating role of education. Journal of Youth and Adolescence, 41(11), 1472–1487. doi:10.1007/s10964-012-9764-9.
Williams, D. R. (2002). Returns to education and experience in self-employment: Evidence from Germany. IRISS Working Papers 4, Retrieved from http://www.diw.de/documents/dokumentenarchiv/17/39221/williams.pdf
Williams, D. R. (2004). Youth self-employment: Its nature and consequences. Small Business Economics, 23(4), 323–336. doi:10.1023/B:SBEJ.0000032035.30738.01.
Youderian, C. (2012). The returns to education for entrepreneurs. Retrieved from K-State Electronic Theses, Dissertations and Reports database. http://hdl.handle.net/2097/14068.
Acknowledgments
An earlier version of this paper was presented at the poster session of the Population Association of America (PAA) 2014 conference in Boston, Massachusetts. We are grateful for feedback offered by conference attendees during that session.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Simon, J.K., Way, M.M. Why the Gap? Determinants of Self-Employment Earnings Differentials for Male and Female Millennials in the US. J Fam Econ Iss 37, 297–312 (2016). https://doi.org/10.1007/s10834-015-9452-5
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10834-015-9452-5