Entrepreneurs and Laborers: Two Sides of Self-Employment Activity in the United States

Annual data from the Panel Study of Income Dynamics (PSID) are used to highlight the distinct character of self-employment in the United States.Following an outline of the regulatory frameworks in which self-employment takes place and a discussion of the inequalities that flourish in the absence of economic safeguards, the data, which span the period between 1980 and 1992 and are based on the self-employment histories of respondents between the ages of 18 and 60, are described and analyzed. Findings suggest that U.S. self-employment is marked by a duality that mirrors the growing economic polarization in the larger society. On the one hand, self-employment leads to the generation of small firms and relative occupational and financial stability, and on the other hand, unskilled self-employment is the fastest-growing self-employment category.These unskilled positions are often unstable and poorly paid. Results also indicate that men and women whose fathers are self-employed are more likely to enter self-employment.In general, increased educational attainment is related to a greater likelihood of entry into professional self-employment, although the effects of education vary by gender.Although the rate of female self-employment is increasing, men have significantly higher self-employment rates. (SAA)