Advertisement

Journal of Family and Economic Issues

, Volume 37, Issue 2, pp 297–312 | Cite as

Why the Gap? Determinants of Self-Employment Earnings Differentials for Male and Female Millennials in the US

  • Jessica K. Simon
  • Megan McDonald Way
Original Paper

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.

Keywords

Self-employment Women’s entrepreneurship Earnings gap Motherhood wage penalty Millennials 

Notes

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.

References

  1. 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.CrossRefGoogle Scholar
  2. American Community Survey (2012). American Community Survey 1-Year Estimates 2012, Table S2002. US Census Bureau. Retrieved from American FactFinder, http://factfinder2.census.gov.
  3. 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.CrossRefGoogle Scholar
  4. 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.CrossRefGoogle Scholar
  5. 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/.
  6. 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.CrossRefGoogle Scholar
  7. 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.CrossRefGoogle Scholar
  8. Becker, G. S. (1991). A treatise on the family. Cambridge: Harvard University Press.Google Scholar
  9. 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.CrossRefGoogle Scholar
  10. 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.CrossRefGoogle Scholar
  11. 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.CrossRefGoogle Scholar
  12. 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.CrossRefGoogle Scholar
  13. 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.
  14. 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.CrossRefGoogle Scholar
  15. 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.CrossRefGoogle Scholar
  16. Budig, M. J., & England, P. (2001). The wage penalty for motherhood. American Sociological Review, 66(2), 204–225. doi: 10.2307/2657415.CrossRefGoogle Scholar
  17. 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.CrossRefGoogle Scholar
  18. 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.
  19. 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.
  20. 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.Google Scholar
  21. 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.CrossRefGoogle Scholar
  22. Cherlin, A. J. (2004). The deinstitutionalization of American marriage. Journal of Marriage and Family, 66(4), 848–861. doi: 10.2307/3600162.CrossRefGoogle Scholar
  23. Connelly, R. (1992). Self-employment and providing child care. Demography, 29(1), 17–29. doi: 10.2307/2061360.CrossRefGoogle Scholar
  24. 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.CrossRefGoogle Scholar
  25. 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.
  26. 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.CrossRefGoogle Scholar
  27. 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.CrossRefGoogle Scholar
  28. 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.CrossRefGoogle Scholar
  29. 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.CrossRefGoogle Scholar
  30. 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.CrossRefGoogle Scholar
  31. Evans, D. S., & Leighton, L. S. (1989). Some empirical aspects of entrepreneurship. The American Economic Review, 79(3), 519–535. doi: 10.2307/1806861.Google Scholar
  32. 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.
  33. 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.CrossRefGoogle Scholar
  34. 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.
  35. 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.
  36. 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.CrossRefGoogle Scholar
  37. 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.
  38. 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.CrossRefGoogle Scholar
  39. 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.CrossRefGoogle Scholar
  40. 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.CrossRefGoogle Scholar
  41. 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.CrossRefGoogle Scholar
  42. 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.CrossRefGoogle Scholar
  43. 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.
  44. 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.
  45. 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.
  46. 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.CrossRefGoogle Scholar
  47. 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.CrossRefGoogle Scholar
  48. 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.
  49. 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.
  50. 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.
  51. 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.CrossRefGoogle Scholar
  52. Layne, C. (2013). Changes in self-employment: 20102011. American Community Survey Brief 11/21. Retrieved from http://www.census.gov/prod/2013pubs/acsbr11-21.pdf .
  53. 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.
  54. 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.CrossRefGoogle Scholar
  55. 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.
  56. Light, A. (2004). Gender differences in the marriage and cohabitation income premium. Demography, 41(2), 263–284. doi: 10.2307/1515166.CrossRefGoogle Scholar
  57. 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.CrossRefGoogle Scholar
  58. 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.
  59. 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.CrossRefGoogle Scholar
  60. 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.CrossRefGoogle Scholar
  61. 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.CrossRefGoogle Scholar
  62. Macpherson, D. A. (1988). Self-employment and married women. Economics Letters, 28(3), 281–284. doi: 10.1016/0165-1765(88)90132-2.CrossRefGoogle Scholar
  63. 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.CrossRefGoogle Scholar
  64. Mincer, J. (1974). Schooling, experience and earnings. National Bureau of Economic Research. http://papers.nber.org/books/minc74-1.
  65. 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.CrossRefGoogle Scholar
  66. 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.CrossRefGoogle Scholar
  67. 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.CrossRefGoogle Scholar
  68. Noseleit, F. (2014). Female self-employment and children. Small Business Economics, 43(3), 1–21. doi: 10.1007/s11187-014-9570-8.CrossRefGoogle Scholar
  69. 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.CrossRefGoogle Scholar
  70. 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.
  71. 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/.
  72. 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.CrossRefGoogle Scholar
  73. 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.CrossRefGoogle Scholar
  74. 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.CrossRefGoogle Scholar
  75. 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.CrossRefGoogle Scholar
  76. 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.
  77. 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.
  78. 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.CrossRefGoogle Scholar
  79. 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.CrossRefGoogle Scholar
  80. 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.CrossRefGoogle Scholar
  81. Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374. doi: 10.2307/1882010.CrossRefGoogle Scholar
  82. 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.
  83. Sutton, P.D., Hamilton, B.E., & Mathews, T.J. (2011). Recent decline in births in the United States, 20072009 (NCHS Data Brief: No. 60). Hyattsville, MD: National Center for Health Statistics. Retrieved from http://www.cdc.gov/nchs/data/databriefs/db60.htm.
  84. 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.
  85. Waldfogel, J. (1997). The effect of children on women’s wages. American Sociological Review, 62(2), 209–217. doi: 10.2307/2657300.CrossRefGoogle Scholar
  86. 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.CrossRefGoogle Scholar
  87. 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.CrossRefGoogle Scholar
  88. 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.CrossRefGoogle Scholar
  89. 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
  90. 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.CrossRefGoogle Scholar
  91. 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.

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.Department of EconomicsBoston UniversityBostonUSA
  2. 2.Economics DivisionBabson CollegeBabson ParkUSA

Personalised recommendations