Probability Of Self-employment Research Articles

From disastrous heat waves to extreme rains: Effects of weather shocks on entrepreneurship

Using household panel data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey and satellite re-analysis temperature and rainfall data, we present the first study to examine the impact of weather shocks on entrepreneurship. We measure temperature and rainfall shocks at the postcode level, and find that an increase in weather shocks in the previous period is associated with a decline in the probability of self-employment in the next period. We find suggestive evidence that health, cognitive functioning and economic activity are mechanisms through which temperature shocks transmit to entrepreneurship. The key insight of this study is that it is less likely that those directly affected by climate events will act entrepreneurially, at least in the short run.

Entrepreneurship Lock and the Demand for Health Insurance: Evidence from the US Affordable Care Act

Most US workers have health insurance plans sponsored and subsidized by their employers. The US Affordable Care Act (ACA) improved and expanded the availability of non-employer-based health insurance, with protections for pre-existing conditions, guaranteed issue, and community rating in non-group markets. Using National Health Interview Survey data for 2009 to 2018 and a difference-in-differences modeling approach, this study finds that the ACA increased self-employment in 2015 and 2016 among US adults with higher demand for health insurance. The probability of self-employment increased by 1.4 to 1.8 percentage points among adults ages 30 to 64 with at least one pre-ACA declinable condition and no alternative source of health insurance through a spouse’s employer or public programs. However, these effects were short-lived. As uncertainty about the long-term viability of the ACA’s health insurance exchanges increased in 2017 and 2018, the probability of self-employment among individuals with high demand for insurance fell to pre-ACA levels.

Does education enhance entrepreneurship?

Formal education is correlated with entrepreneurial activity and success, but correlation does not indicate causation. Education and entrepreneurship are both influenced by other related factors. The current study estimates the causal effects of formal education on entrepreneurship outcomes by instrumenting for an individual’s years of schooling using cohort mean years of maternal schooling observed decades prior. We differentiate self-employment by industry employment growth and firm incorporation status. Policymakers are especially interested in entrepreneurship with the potential to create substantial employment growth. We find that an additional year of schooling increases self-employment in high-growth industries by 1.12 percentage points for women and by 0.88 percentage points for men. Education reduces the probability of male self-employment in shrinking industries. Education also increases incorporated self-employment for women and men and reduces unincorporated self-employment among men but not women. The overall probability of self-employment increases with education for women but is unaffected by education for men. The results suggest that formal education enhances entrepreneurship.

The Affordable Care Act and Women’s Self-Employment in the United States

The United States’ Affordable Care Act (ACA) of 2010 improved and expanded availability of non-group health insurance. Previous studies have shown that women in the US workforce value health insurance more highly than men do. Because prior to the ACA self-employed individuals did not have guaranteed access to affordable health insurance coverage, women’s relatively lower rate of self-employment may partly have reflected their greater “job lock” due to employer-based health insurance. This article employs nationally representative survey data for 2009–18 and a quasi-experimental difference-in-difference modeling approach and finds that unmarried women’s probability of self-employment increased by 1.2 percentage points in 2015–18, after the ACA’s expansion of non-group health insurance came into effect. Among women who have never married, overall probability of self-employment increased by 1.2–1.5 percentage points versus trend, and the probability of transitioning into full-time self-employment increased by 0.9 percentage points. HIGHLIGHTS In the US, unmarried women are less likely than men to be self-employed. The Affordable Care Act improved access to non-employer-based health insurance, reducing the cost of leaving jobs. As a result, from 2015–2018, unmarried women were increasingly drawn to self-employment. The ACA’s expansion of health insurance thus provides important economic benefits beyond healthcare access.

The persistence of China’s great famine on individuals’ choice to pursue self-employment

Self-employment is a field of special importance to developing countries in view of its positive role on socio-economic development. This study exploits a unique nationally representative database using the 1949–1985 China Demographic Data, the 2016 China Labour Force Dynamic Survey, and the 1959–1999 China Drought Disaster Data. Through a difference-in-differences estimation, we reveal that the Great Chinese Famine bear significantly upon individuals’ self-employment decisions. Specifically, a 1% increase in famine intensity results in a 3.89% and 2.31% decrease in the probability of self-employment and self-employed entrepreneurs entering the agricultural sector, respectively. Using rainfall as an instrument, we further show that the documented relationship is causal. Overall, we provide strong empirical evidence that famine exposure significantly affects one’s self-employment decisions, and can help design policies aiming to promote self-employment and the development of small businesses.

State Medicaid Expansion and the Self-Employed

This paper examines effects of state Medicaid Expansion via the Affordable Care Act on the self-employed. We first examine impacts on the probability of self-employment and find small and not significant estimated effects of Medicaid expansion on the likelihood of being self-employed. We then examine effects of Medicaid expansion on the probability of having health insurance for persons who are self-employed. State Medicaid expansion increased overall health insurance coverage rates, with especially large impacts for the unincorporated self-employed. Impacts on health insurance rates of the self-employed also strengthened over time. The results indicate that Medicaid expansion does not affect entry into self-employment but it does provide significant health insurance benefits for many small business owners with low incomes who otherwise would face considerable difficulty obtaining health insurance.

What determines own-account work in Colombia? Some empirical evidence for the years 2010 and 2013

The main objective of this paper is to analyze the effect of education, age, access to ICTs and physical and financial assets, as well as other personal and socio-economic characteristics on the probability of being a formal or informal own-account worker. In order to achieve this purpose, information will be used at the urban level for the twenty-one main cities in Colombia from the Great Integrated Household Survey 2010 (GISH), by the National Administrative Department of Statistics (DANE) and the Colombian Longitudinal Survey of the University of the Andes 2013 (CLS). Based on these data, models that have a qualitative binomial and multinomial dependent variable are employed, correcting for selection bias. As main results, it was found that physical assets and access to credit have a positive marginal effect on the probability of being an own-account worker. On the other hand, the marginal effect of education was negative; the lower the educational level, the greater the probability of self-employment, especially regarding the informal work.

The importance of capital in closing the entrepreneurial gender gap: A longitudinal study of lottery wins

Would improving women's access to capital reduce the gender entrepreneurial gap? We study this issue by exploiting longitudinal data on lottery winners. Comparing between large to small winners, we find that an increase in lottery win in period t − 1 significantly increases the likelihood of becoming self-employed in period t. This windfall effect is statistically the same in magnitude for men and women; the top 25% winners (an average win = £831.16) in year t − 1 report a significant increase in the probability of self-employment in year t by approximately 2 percentage points, which is approximately 20–30% of the gender entrepreneurial gap. These results suggest that we can causally reduce the gender entrepreneurial gap by improving women's access to capital that might not be as readily available to the aspiring female entrepreneurs as it is to male entrepreneurs.

Self-employment: Influence of Tax Incentives and Income Underreporting

The aim of the article is to answer the question whether the tax benefits that can be obtained by the self-employed in Poland influence the decision to start their own business. In the study, the EUROMOD microsimulation model is used to determine tax benefits from self-employment. The estimated tax benefits are then used in a probit regression to explain the probability of self-employment. The survey is carried out for both original EU-SILC data and adjusted data, assuming that the income reported by the self-employed is underreported. The results of the survey based on the original data indicate that taxpayers make irrational decisions about taking up self-employment. This is because as the benefits of self-employment increase, the probability of self-employment decreases. After ad-justing the data on self-employed income with the underreported income, the results of the analysis lead to the opposite conclusion.

Emergency Aid for Self-Employed in the COVID-19 Pandemic: A Flash in the Pan?

The self-employed are among those facing the highest probability of strong income losses during the COVID-19 pandemic. Governments in many countries introduced support programs to support the self-employed, including the German federal government, which approved a €50bn emergency aid program at the end of March 2020 offering one-off lump-sum payments of up to €15,000 to those facing substantial revenue declines. In this contribution, we investigate the impact of this program using a real-time online-survey data with a total of more than 20,000 observations. We employ propensity score matching, making use of a rich set of variables that influence selection into the treatment and the outcome variable, the subjective survival probability. We observe that the emergency aid program had significant effects, with the subjective survival probability of self-employment being moderately increased. We further reveal important effect heterogeneities with respect to education, risk tolerance, and industries. We also observe positive effects only among those whose application was processed within a few days. Lastly, the positive effect on the survival probability is fading out already two weeks after the emergency aid was granted. Our findings have important policy implications for the design of such support programs in the course of this crisis.

Nurse practitioners’ workforce outcomes under implementation of full practice authority

BackgroundFull practice authority laws that permit nurse practitioners (NPs) to practice independently and prescribe medications may influence NPs’ workforce outcomes. PurposeTo examine whether implementation of full practice authority laws affect NP self-employment, average earnings, and likelihood of residing in a primary care health professional shortage area (HPSA). MethodsA nationally representative U.S. sample of 9,782 NPs employed in health care during 2010 to 2018 was drawn from the American Community Survey. Difference-in-differences regression was used to estimate covariate-adjusted mean differences in NPs’ workforce outcomes after full practice authority implementation. FindingsAmong full-time employed NPs, full practice authority was associated with an increased probability of residing in a HPSA (adjusted odds ratio [aOR]:2.34, 95%CI 1.14, 4.83) and with a higher mean probability of self-employment (aOR:4.97, 95%CI 1.00, 24.86). DiscussionFull practice authority implementation improves access to primary care providers in health professional shortage areas and may increase practice ownership among NPs.

State Medicaid Expansion and the Self-Employed

This paper examines effects of state Medicaid Expansion via the Affordable Care Act on the self-employed. We first examine impacts on the probability of self-employment and find no significant effect. We then examine the probability of having health insurance and the type of coverage for self-employed persons. Medicaid expansion increased overall health insurance coverage rates, with especially large impacts for the unincorporated self-employed. Medicaid expansion also increased the probability of Medicaid coverage as expected, but there is evidence of crowd out of other types of coverage. Impacts on health insurance rates of the self-employed also strengthened over time.

Delay of gratificationand business performancein least developed countries

Purpose Does delay of gratification affect the probability of engaging in self-employment and does it contribute to business performance? This paper aims to quantify impacts of delay of gratification on engaging in self-employment and business performance. Design/methodology/approach Using Lao PDR as a representative of least developed countries, the authors analyze nationally representative survey data from the Lao PDR – STEP Skills Measurement Household Survey and estimate the binary logit/probit model to quantify impacts of delay of gratification on probability of self-employment. And, the impacts of delayed gratification on business performance of the self-employed individuals are also estimated. Findings Those with a lower degree of delayed gratification tend to elect to be self-employed instead of being full-time employees. However, a higher delay of gratification score is found to positively correlate with higher business performance among those who are self-employed. Other control variables such as business characteristics, education level and skills of the self-employed also play an important role in higher business performance. Research limitations/implications Analysis from this paper still shows some weak points and limitations. First, the data set on self-employment has little representation from industry and the service sector and lacks many important variables such as parents’ characteristics and working hours. Second, there is no clear measurement of delay of gratification, as the measurements use only hypothesis money. Finally, there is a lack of studies to back up the result of delay of gratification on business performance, especially in a least developed country such as Lao PDR. The authors suggest that future research be conducted with richer data regarding the self-employed in industries and services. It would be quite interesting to study further the effect of delay of gratification along with grit, another behavioral variable, on business performance. Practical implications Based on the findings, it is therefore crucial that the Lao Government support a policy that helps strengthen both cognitive and noncognitive skills and the delay of gratification along with education to make Lao self-employment more productive. Social implications Providing the self-employed with adequate skills to succeed in their enterprises can lead them and the nation to escape the poverty trap. Family, school and government should promote delay of gratification among young children. Encouraging special activities that foster emotional and behavioral skills learning and practice for children, such as religious learning and meditation, might boost their ability to delay gratification. Moreover, support for skills training, both basic and job-relevant skills, could promote business experience exchange by creating an organization that provides guidelines, information and advice for self-employment. Originality/value Even though there is extensive research indicating that delayed gratification exists in many contexts, there are very few studies investigating the impact of delayed gratification on the business, especially on the decision to be self-employed and the resulting business performance. The delay of gratification could be one factor that influences decisions on job selection or employment status and that influences business performance as well. This paper is also the first one conducted in a least developed country such as Lao PDR.

Learning to Be Self-Employed: Specific Capital Accumulation, Labour Mobility, and the Choice of Self-Employment

Does the length of a worker’s prior experience as an employee later determine their choice of self-employment? If so, to what extent is this type of mobility attributable to genuine duration-dependence implied by specific capital accumulation? And then, what theoretical basis is the presence of specific capital attributable? To answers these questions, this paper uses longitudinal HILDA survey data of Australian workers to estimate a dynamic random-effects panel probit model of the probability of self-employment and isolate the impact of genuine duration-dependence on the likelihood that employees increasingly choose self-employment with increasing job-tenure. In doing so, this paper makes a departure from the heterogeneity-based explanations for self-employment common in the entrepreneurship literature and, instead, expands upon the well-established rationales for labour mobility and job-turnover in labour economics. While employee job-change and labour market mobility has long attracted the attention of labour economists, existing models ignore self-employment as the outside option. Of particular interest, therefore, is whether duration-dependence influences the probability of employees becoming self-employed either because the relative appeal of outside self-employment opportunities increase as ‘better’ employee job-offers from external firms diminish (as implied by Jovanovic’s theory of job-matching), or because the prospective opportunities in self-employment become increasingly valuable (as implied by Becker’s human-capital theory). This paper finds compelling evidence that the choice of self-employment is driven by the same economic forces that determine job-change and labour mobility more broadly. But, rather than strengthening worker-firm relationships, duration-dependence attributable to specific capital accumulation acts as a ‘double-edged sword’ increasing the probability of employees becoming self-employed with prolonged tenure.

Gender and Entrepreneurship: Empirical Analysis Using the German Socio-Economic Panel (SOEP)

This study investigates the gender disparity in entrepreneurship in Germany. Using the data from the Socio-Economic Panel (SOEP), levels of education, Risk tolerance, and parental role model have a positive significant influence on the probability of Women’s Self-employment. I find no evidence that the higher educational level plays a role in Men’s probability of self-employment. Also, there is a higher probability of self-employment activity in East Germany than in West Germany. In West Germany, strong evidence prevails that both self-employed father and mother has a positive influence on Women’s probability of self-employed but not for men. Yet, in East Germany, only self-employed mother's has a significant influence on women. Non-linear Blinder-Oaxaca decomposition technique revealed that Women have a less probability of self-employment than Men. On average more than one-third of the gender difference driven from risk aversion behavior of women.

Responsibility or autonomy: children and the probability of self-employment in the USA

This paper studies the effect of children on the likelihood of self-employment. Having children can change preferences that are central to the decision whether to be self-employed. On the one hand, individuals’ preference for autonomy and flexibility increases when having children, which increases the willingness to be self-employed. On the other hand, having children entails a responsibility over someone else, which increases individual risk aversion and decreases the willingness to be self-employed. Using a pooled cross section of 26 years from the General Social Survey, instrumental variable estimates indicate that, in the USA, having children under the age of 18 in the household decreases the likelihood of being self-employed by 11 % (i.e., the responsibility effect dominates). This effect is considerable as a child decreases the probability of self-employment more than the increase associated with being raised by a self-employed father—one of the main determinants of self-employment.

Media and Occupational Choice

We address the question of whether media influences occupational choices. To theoretically examine media effects, we construct a dynamic Bayesian occupational choice model with sequential decisions under ambiguity due to imperfect information. We show that sufficiently intensive positive media articles and reports about entrepreneurship increase the probability of self-employment and decrease the probability of wage work. To test our model, we use an instrumental variable approach to identify causal media effects using US micro data and a country-level macro panel with two different media variables. We find that an increase in positive media articles and reports about entrepreneurs generates effects on choice probabilities that are consistent with our model.

Job-Search Requirements for Unemployed at the End of Working Life

This paper investigates the extent to which job search requirements in unemployment insurance (U.I.) increase the probability of self-employment as a retirement route. For causal identification, we apply a difference-in-differences approach, using a Dutch 2004 policy reform that introduced job-search requirements in U.I. for persons aged 57.5 and older. Unemployment dynamics and self-employment probabilities are studied using a dynamic multinomial logit model with unobserved heterogeneity. The results suggest that job-search requirements stimulated people to exit unemployment and discouraged older workers to enter unemployment. The probability of self-employment as an exit route to retirement increased relative to U.I., but not relative to paid employment.

A Wage-Efficiency Spatial Model for US Self-Employed Workers

In this paper, we study self-employment in a theoretical setting derived from wage-efficiency spatial models, where leisure and effort at work are complementary. We develop a spatial model of self-employment in which effort at work and commuting are negatively related, and thus the probability of self-employment decreases with “expected” commuting time. We use time-use data from the American Time Use Survey 2003-2014 to analyze the spatial distribution of self-employment across metropolitan areas in the US, focusing on the relationship between commuting time and the probability of self-employment. Our empirical results show that the probability of self-employment is negatively related to the “expected” commuting time, giving empirical support to our theoretical model. Furthermore, we propose a GIS model to show that commuting and self-employment rates are, in relation to unemployment rates, negatively related.

Ethnic concentration and entrepreneurship: the case of African Americans in three US metropolitan areas

Using 2006–2010 American Community Survey data and a multilevel research design, this study examines how the spatial concentration of African Americans within local labor markets is associated with the probability of self-employment and job earnings from business ownership. We find a negative relationship between the spatial concentration of African Americans and their business ownership in Miami, but not in Atlanta. In Detroit, a higher percentage of US-born African Americans in the local labor market is actually associated with a higher probability of business ownership. The relationship between the percentage of African Americans and job earnings also differs across the three study areas. These results suggest that the relationship between racial/ethnic concentration and African American entrepreneurship is highly contingent on the economic conditions and demographic composition of local labor markets.