Journal
LABOUR ECONOMICS
Volume 11, Issue 5, Pages 575-598Publisher
ELSEVIER
DOI: 10.1016/j.labeco.2003.10.002
Keywords
self-employment; occupational choice; labor supply; wage determinants
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Many public policies are designed to encourage self-employment. However, because self-employment experiences are typically brief, it becomes important to understand the long-term consequences of entering and then leaving self-employment. Using the Panel Study of Income Dynamics (PSID), we examine the effects of brief self-employment experience on subsequent labor market outcomes. We find that, relative to continued wage employment, brief spells in self-employment do not increase-and probably actually reduce-average hourly earnings upon return to wage employment. We also find that those who experience self-employment have difficulty returning to the wage sector. However, these consequences are small compared to similar experiences in unemployment. (C) 2003 Elsevier B.V. All rights reserved.
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