Male/Female Earnings Differences in Self-Employment: The Effects of Marriage, Children, and the Household Division of Labor

Abstract

Data from the National Longitudinal Study of the High School Class of 1972 and the Panel Study of Income Dynamics are used to investigate reasons for the gender earnings gap among the self-employed. Compared to organizational employment, self-employment may allow workers freer adjustment of work effort in response to changing needs for market work income and household production. Consistent with that hypothesis, the analysis shows that self-employed women's earnings declined with marriage, family size, and hours of housework, whereas self-employed men's earnings increased with marriage and family size. Organizationally employed workers' earnings exhibited a similar but less pronounced pattern, suggesting that in the self-employment sector the structure of female/male relative earnings was more sensitive to family size and composition. Self-employed women and men specialized more intensively in housework and market work, respectively. Women apparently tended to choose self-employment to facilitate household production, and men to achieve higher earnings.