A large literature finds that the self-employed are more satisfied in their jobs. Interestingly, like in the wage and salary sector, ceteris paribus, self-employed women are found to have more satisfaction in their jobs than self-employed men, even though the gender earnings differential is higher for the self-employed. This paper examines the so-called paradox of the contented female worker for both sectors, focusing on the importance of certain job attributes and whether workers actually experience these attributes. Properly controlling for the gap between desiring and actually obtaining these attributes ‘explains’ the gender differential in job satisfaction of the self-employed.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Price includes VAT (USA)
Tax calculation will be finalised during checkout.
The majority of the literature in this area investigates the reasonably consistent finding that individuals are happier in self-employment compared to wage and salary work (see for example, Bradley and Roberts 2004; Kawaguchi 2008, for the U.S.; Fuchs-Schundeln 2009 for Germany; Andersson 2008, for Sweden; and Blanchflower and Oswald 1998; Benz and Frey 2004, for multiple-country studies).
We note that while some of the research (Crosby 1982; Powell and Eddleston 2008) defines the “paradox of the contented female worker” as equal job satisfaction for males and females despite the female earnings penalty, this paper follows the line of literature (Clark 1997) that defines the paradox as higher job satisfaction for females, despite the female earnings penalty.
Powell and Eddleston (2008) refute this hypothesis. They find that the gender effect in job satisfaction cannot be explained by differential inputs whereby women invest less time in their businesses and as a result perceive their subpar success as equitable. Furthermore, Millán et al. (2013) only find this negative relationship between working hours and job satisfaction in the wage and salary sector and conjecture that because self-employed workers can choose their number of working hours, they are more likely to be satisfied in their work.
Using 2003 Current Population Survey (CPS) data, Roche (2014) estimates a 61 % earnings gap between male and female median annual earnings, and a 70 % earnings gap between male and female median hourly earnings among the self-employed.
This finding is only evident with women in blue collar jobs. These women have relatively flat returns to education across the earnings distribution.
Research in Europe by Congregado et al. (2016), however, suggests that the incidence of mismatch is lower for women, even among the self-employed. Why there is this difference is not quite clear though it may have something to do with differences in the nature of self-employment across countries.
The survey question is “When thinking about a job, how important is each of the following factors to you? (salary, benefits, etc.).”
The survey question is “Thinking about your principal job…, please rate your satisfaction with that job’s… (salary, benefits, etc.).”
‘Dissatisfied’ is defined here at workers responding that they are either ‘somewhat dissatisfied’ or ‘not at all satisfied’ with the provision of the attribute. Robustness checks using just the latter answer generates qualitatively similar results in the regressions below and are available from the authors upon request. In addition, we combine into one big group all those who identify the attribute as not ‘very important’ regardless of their satisfaction with the attribute.
While focusing on a homogeneous group is useful in our analysis, we acknowledge that the findings may not extrapolate to explain the behavior of all individuals in self-employment. It is worth noting, however, that this sub-set of self-employed workers is an important group in the macroeconomy. Van Praag and van Stel (2013) find that educated entrepreneurs create more jobs and own larger firms relative to business owners without a college degree.
The regressions used here are ordered probits, given the ordinal nature of the satisfaction equations. Collapsing the job satisfaction variable into a binary variable (for very satisfied or not) and estimating the regressions using probit maximum likelihood techniques gives qualitatively similar results and are available upon request.
This variable comes from a question in the NSCG asking how closely related a worker’s job and education in their last degree is. Possible answers are: ‘closely related’, ‘somewhat related’, and ‘not at all related’ which we refer to as ‘matched’, ‘moderately mismatched’ and ‘severely mismatched’ respectively.
It should be noted, however, that this is a different educational sample than most others in the literature, as everyone in this sample has at least a bachelor’s degree and that the marginal effects are fairly small.
Having subjective well-being measures on both the right and left-hand side of the regression can generate biases since in cross sections there may be unobservable traits (e.g. overall happy nature) that may affect both sets of variables (see Hamermesh, 2004). While this would bias the estimated coefficients of the ‘Gap’ variables here, it should not bias the coefficient on the key variable of interest—the female indicator, unless there is a correlation between gender and the unobservable trait (e.g. women being ‘naturally’ happier than men) which we do not think is the case.
Andersson, P. (2008). Happiness and health: Well-being among the self-employed. The Journal of Socio-Economics, 37, 213–236. doi:10.1016/j.socec.2007.03.003.
Baker. J. G., Craft, R. K., & Finn, M. G. (2010). Advantages and disadvantages: Job satisfaction of science and engineering baccalaureates completing doctoral verses professional degrees. Working Paper, Southern Utah University, Department of Economics.
Bender, K. A., Donohue, S. M., & Heywood, J. S. (2005). Job satisfaction and gender segregation. Oxford Economic Papers, 57, 479–496. doi:10.1093/oep/gpi015.
Bender, K. A., & Heywood, J. S. (2006). Job satisfaction of the highly educated: The role of gender, academic tenure, and earnings. Scottish Journal of Political Economy, 53, 253–279. doi:10.1111/j.1467-9485.2006.00379.x.
Bender, K. A., & Roche, K. (2013). Educational mismatch and self-employment. Economics of Education Review, 34, 85–95. doi:10.1016/j.econedurev.2013.01.010.
Benz, M., & Frey, B. S. (2004). Being independent raises happiness at work. Swedish Economic Policy Review, 11, 95–134.
Benz, M., & Frey, B. S. (2008). The value of doing what you like: Evidence from the self-employed in 23 countries. Journal of Economic Behavior & Organization, 68, 445–455. doi:10.1016/j.jebo.2006.10.014.
Blanchflower, D. G., & Oswald, A. J. (1998). What makes an entrepreneur? Journal of Labor Economics, 16, 26–53. doi:10.1086/209881.
Boden, R. (1996). Gender and self-employment selection: An empirical assessment. The Journal of Socio-Economics, 25, 671–682. doi:10.1016/S1053-5357(96)90046-3.
Bradley, D. E., & Roberts, J. A. (2004). Self-employment and job satisfaction: Investigating the role of self-efficacy, depression, and seniority. Journal of Small Business Management, 42, 37–58. doi:10.1111/j.1540-627X.2004.00096.x.
Bryson, A., Cappellari, L., & Lucifora, C. (2010). Why so unhappy? The effects of unionization on job satisfaction. Oxford Bulletin of Economics and Statistics, 72, 357–380. doi:10.1111/j.1468-0084.2010.00587.x.
Carr, D. (1996). Two paths to self-employment? Women’s and men’s self-employment in the United States, 1980. Work and Occupations, 23, 26–53. doi:10.1177/0730888496023001003.
Clark, A. J. (1997). Job satisfaction and gender: Why are women so happy at work? Labour Economics, 4, 341–372. doi:10.1016/S0927-5371(97)00010-9.
Clark, A. E., & Oswald, A. J. (1996). Satisfaction and comparison income. Journal of Public Economics, 61, 359–381. doi:10.1016/0047-2727(95)01564-7.
Clark, A. E., Oswald, A. J., & Warr, P. (1996). Is job satisfaction U-shaped in age? Journal of Occupational and Organizational Psychology, 69, 57–81. doi:10.1111/j.2044-8325.1996.tb00600.x.
Congregado, E., Iglesias, J., Millán, J. M., & Román, C. (2016). Incidence, effects, dynamics and routes out of overqualification in Europe: A comprehensive analysis distinguishing by employment status. Applied Economics, 48, 411–445. doi:10.1080/00036846.2015.1083080.
Connelly, R. (1992). Self-employment and providing child care. Demography, 29, 17–29. doi:10.2307/2061360.
Cooper, A. C., & Artz, K. W. (1995). Determinants of satisfaction for entrepreneurs. Journal of Business Venturing, 10, 439–457. doi:10.1016/0883-9026(95)00083-K.
Crosby, F. J. (1982). Relative deprivation and working women. New York: Oxford University Press.
Edwards, L. N., & Field-Hendrey, E. (2002). Home-based work and women’s labor force decisions. Journal of Labor Economics, 20, 170–200. doi:10.1086/323936.
Fuchs-Schündeln, N. (2009). On preferences for being self-employed. Journal of Economic Behavior & Organization, 71, 162–171. doi:10.1016/j.jebo.2009.03.024.
Hamermesh, D. S. (2004). Subjective outcomes in economics. Southern Economic Journal, 71, 1–11. doi:10.2307/4135306.
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.
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, 95–114. doi:10.2307/2696034.
Kawaguchi, D. (2008). Self-employment rents: Evidence from job satisfaction scores. Hitotsubashi Journal of Economics, 49, 35–45. http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/15881/1/HJeco0490100350.pdf.
Koellinger, P., Minniti, M., & Schade, C. (2013). Gender differences in entrepreneurial propensity. Oxford Bulletin of Economics and Statistics, 75, 213–234. doi:10.1111/j.1468-0084.2011.00689.x.
Lalive, R., & Stutzer, A. (2010). Approval of equal rights and gender differences in well-being. Journal of Population Economics, 23, 933–962. doi:10.1007/s00148-009-0257-4.
Lange, T. (2012). Job satisfaction and self-employment: Autonomy or personality? Small Business Economics, 38, 165–177. doi:10.1007/s11187-009-9249-8.
Millán, J. M., Hessels, J., Thurik, R., & Aguado, R. (2013). Determinants of job satisfaction: A European comparison of self-employed and paid employees. Small Business Economics, 40, 651–670. doi:10.1007/s11187-011-9380-1.
Neumark, D., Wall, B., & Zhang, J. (2011). Do small businesses create more jobs? New evidence from the National Establishment Time Series. Review of Economics and Statistics, 93, 16–29. doi:10.1162/REST_a_00060.
Parker, S. C. (2009). The economics of entrepreneurship. Cambridge, MA: Cambridge University Press.
Powell, G. N., & Eddleston, K. A. (2008). The paradox of the contented female business owner. Journal of Vocational Behavior, 73, 24–36. doi:10.1016/j.jvb.2007.12.005.
Roche, K. (2013). Reconciling gender differences in the returns to education in self-employment: Does occupation matter? The Journal of Socio-Economics, 44, 112–119. doi:10.1016/j.socec.2013.02.022.
Roche, K. (2014). Female self-employment in the United States: An update to 2012. Monthly Labor Review October, 2014. http://www.bls.gov/opub/mlr/2014/article/female-self-employment-in-the-united-states-an-update-to-2012.htm.
Sloane, P. J., & Williams, H. (2000). Job satisfaction, comparison earnings, and gender. Labour, 14, 473–502. doi:10.1111/1467-9914.00142.
Sousa-Poza, A., & Sousa-Poza, A. A. (2000). Taking another look at the gender/job-satisfaction paradox. Kyklos, 53, 135–152. doi:10.1111/1467-6435.00114.
van Praag, M., & van Stel, A. (2013). The more business owners, the merrier? The role of tertiary education. Small Business Economics, 41(2), 335–357. doi:10.1007/s11187-012-9436-x.
See Table 8.
About this article
Cite this article
Bender, K.A., Roche, K. Self-employment and the paradox of the contented female worker. Small Bus Econ 47, 421–435 (2016). https://doi.org/10.1007/s11187-016-9731-z
- Job satisfaction
- Gender differences
- Job attributes
- Paradox of the contented female worker