Abstract
Do men and women carry different motivations for entering self-employment? Earlier researchers have suggested that, as primary care givers for children and families, women face a more stringent time constraint relative to men. Thus, where men see self-employment as a chance for greater financial opportunity, women see a chance to take work that allows more time at home. This paper investigates this hypothesis using unique data that allow analysis of individual self-employment as a function of traditional economic and demographic variables as well as variables that partially capture individuals’ opinions and perceptions of pecuniary and nonpecuniary aspects of entrepreneurism. Results suggest that men who choose self-employment are influenced principally by pecuniary concerns, while women are influenced principally by family concerns and by the opinions of their family, friends, and peers.
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Notes
As Aronson (1991) shows, from 1965 to 1986 the aggregate male self-employment rate hovered around 9 to 10 % with no demonstrable trend up or down over that period. However, by 2010, the female rate had risen to over 9.4 % while the male rate had risen only to 11.7 % (Social Security Administration 2012).
In the interest of brevity, we do not discuss the necessary conditions for the existence of optimal quantities of wage-employment and non-market time. However, the fact that the individual’s utility maximization could result in any of three time-allocation outcomes forms the basis of our empirical approach emphasizing multinomial logit estimation, as discussed in later sections. These outcomes include the possibility that the individual chooses zero wage- and self-employment and is observed as unemployed, perhaps attracted to available unemployment benefits.
Blau (1985) also modelled the self-employment/wage-employment choice as a corner solution. For such a solution, U s /U w = X s /X w may or may not hold. However, given the constraint, the individual would still maximize utility.
Exclusive self-employment would represent a special case in which the individual moves to the opposite corner equilibrium. While such a move may plausibly occur, an individual may regard an initial move to an interior solution as relatively less risky. Future research might study the extent to which self-employed individuals systematically use the combination to “test the waters” or as a transition to exclusive self-employment, as well as implications of each strategy for eventual success.
By the WECS definition, those classified merely as “trying” had, at the time of their interview, given a venture serious thought, proposed a written business plan, helped organize a start-up team, sought facilities and/or equipment, or taken some other non-trivial step. However, because only one respondent in the sample self-identified as “trying,” we do not statistically analyze such individuals separately; categorizing this person as non-employed does not affect the results.
All Likert-scale variables used in this study were coded as follows: Strongly Agree = 4, Agree = 3, Disagree = 2, and Strongly Disagree = 1. Quotations appearing in “Data and Variables” and “Differences in Means” are taken from Reynolds and White (1995).
The variables that relate to fears about the consequences of a future entrepreneurial failure may also account for certain socially influenced attitudes toward risk.
Regrettably, the WECS does not allow finer identification of unmarried individuals as divorced, separated, widowed, etc. To incorporate all reasonable possible modes of time allocation, samples used for statistical analysis included individuals not working who were classified as homemakers, unemployed, and students were included in the sample alongside wage-employed and self-employed individuals. The sample excluded those not working because of retirement or disability, as these individuals do not make the time-allocation choices at issue here.
Because of occasional similarities in the phrasing of some of the WECS instruments, the data were scrutinized for the presence of serious linear correlation between independent variables. Variables found to be redundant were not used in the analysis.
Calculations for men over age 55 yield predicted probabilities less than that shown at age 55, indicating that the probability does peak at age 55 for the men in the present sample.
Karoly and Zissimopoulos (2004) also note, based on research using data from the Health and Retirement Study, that older entrepreneurs appear able to work longer even when many of them report poorer health, likely aided by the fact that they are also able to “work with more flexibility in hours (p. 43),” further indication of how self-employment complements non-market time allocation in practice.
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Allen, W.D., Curington, W.P. The Self-Employment of Men and Women: What are their Motivations?. J Labor Res 35, 143–161 (2014). https://doi.org/10.1007/s12122-014-9176-6
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DOI: https://doi.org/10.1007/s12122-014-9176-6