The Transformation of Self Employment
February 2022
Working Paper Number:
CES-22-03
Abstract
Over the past half-century, while self-employment has consistently accounted for around one in ten of the United States workforce, its composition has changed. Since 1970, industries with high startup capital requirements have declined from 53% of self-employment to 23%. This same time period also witnessed declines in 'hometown' local entrepreneurship and the probability of the self-employed being among top earners. Using 2016 data, we show that high startup capital requirements are linked with lower profitability at small scales. The transition away from high startup capital industries appears most closely linked to changes in small business production functions and less due to advantageous reallocation to other opportunities, growth in returns-to-scale among large businesses, or a worsening of financing conditions and debt levels.
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:
investment,
enterprise,
employed,
entrepreneurial,
startup,
venture,
entrepreneur,
business startups,
entrepreneurship,
finance,
proprietor,
capital,
rural,
wealth,
franchising,
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Longitudinal Business Database,
Decennial Census,
American Community Survey,
Special Sworn Status,
Census Bureau Disclosure Review Board,
Survey of Business Owners,
2010 Census,
Integrated Public Use Microdata Series,
Business Dynamics Statistics,
Federal Statistical Research Data Center,
Annual Survey of Entrepreneurs
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