Differences in Self-employment Duration by Year of Entry & Pre-entry
November 2016
Working Paper Number:
carra-2016-09
Abstract
Self-employment is associated with entrepreneurship and a motivation to pursue an opportunity. Previous research indicates that people also become self-employed because of limited opportunities in the wage sector. Using a unique set of data that links the American Community Survey to Form 1040 and W-2 records, this paper extends the existing literature by examining self-employment duration for five consecutive entry cohorts, including two cohorts who entered self-employment during the Great Recession. Severely limited labor market opportunities may have driven many in the recession cohorts to enter self-employment, while those entering self-employment during the boom may have been pursuing opportunities under favorable market conditions. To more explicitly test the concept of "necessity" versus "opportunity" self-employment, we also examine the pre-entry wage labor attachment of entrants. Specifically, we ask whether an association exists between wage labor attachment and the duration of self-employment. We also explore whether the demographic/socio-economic characteristics and self-employment exit behavior of the cohorts are different, and if so, how. We find evidence consistent with the existence of "necessity" vs. "opportunity" self-employment types.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
employ,
employed,
entrepreneur,
entrepreneurship,
labor,
proprietor,
longitudinal,
recession,
employment entrepreneurship,
recessionary,
opportunity,
socioeconomic,
earn,
filing,
employment unemployment,
earner,
unemployed,
cohort
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Internal Revenue Service,
Bureau of Labor Statistics,
Current Population Survey,
Social Security,
American Community Survey,
Social Security Number,
W-2,
Center for Administrative Records Research
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'Differences in Self-employment Duration by Year of Entry & Pre-entry' are listed below in order of similarity.
-
Working PaperGender Differences in Self-employment Duration: the Case of Opportunity and Necessity Entrepreneurs🔥
September 2019
Working Paper Number:
CES-19-24
A strand of the self-employment literature suggests that those 'pushed' into self-employment out of necessity may perform differently from those 'pulled' into self-employment to pursue a business opportunity. While findings on self-employment outcomes by self-employed type are not unanimous, there is mounting evidence that performance outcomes differ between these two self-employed types. Another strand of the literature has found important gender differences in self-employment entry rates, motivations for entry, and outcomes. Using a unique set of data that links the American Community Survey to administrative data from Form 1040 and W-2 records, we bring together these two strands of the literature. We explore whether there are gender differences in self-employment duration of self-employed types. In particular, we examine the likelihood of self-employment exit towards unemployment versus the wage sector for five consecutive entry cohorts, including two cohorts who entered self-employment during the Great Recession. Severely limited labor-market opportunities may have driven many in the recession cohorts to enter self-employment, while those entering self-employment during the boom may have been pursuing opportunities under favorable market conditions. To more explicitly test the concept of 'necessity' versus 'opportunity' self-employment, we also examine the wage labor attachment (or weeks worked in the wage sector) in the year prior to becoming self-employed. We find that, within the cohorts we examine, there are gender differences in the rate at which men and women depart self-employment for either wage work or non-participation, but that the patterns are dependent on pre self-employment wage-sector attachment and cohort effects.View Full Paper PDF
-
Working PaperChanges in EITC Eligibility and Participation, 2005'2009
July 2014
Working Paper Number:
carra-2014-04
The rate of participation in the Earned Income Tax Credit (EITC) has been widely studied, but changes over time in eligibility for the credit have received less attention. One question of importance to policy-makers is whether (or by how much) eligibility might increase during economic downturns. The EITC is fundamentally tied to work. During periods of high unemployment, eligibility may decrease due to a lower number of workers - especially low-skilled workers - filing for a given tax year. On the other hand, family structure and underemployment may lead to increases in eligibility. For example, earners may become eligible when a two-earner family loses one job or when an earner works part of the year or fewer hours. Using IRS tax data linked with the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), I examine changes in EITC eligibility and take-up between tax years 2005 and 2009, during which time the Great Recession began and ended. Employing fixed-effects models, I assess patterns of eligibility among demographic groups based on characteristics that also predict labor market outcomes. Results indicate that, in a period when overall EITC eligibility rates increased, the state unemployment rate had a significant positive effect on eligibility and a significant negative effect on take-up. Meanwhile, although joint filers, those with more children, and men experienced increasing rates of eligibility, those with less education experienced decreasing rates. Results point to the possibility that labor market groups who experienced the highest rates of unemployment in the recession may have become ineligible due to full-year job loss.View Full Paper PDF
-
Working PaperOWNER CHARACTERISTICS AND FIRM PERFORMANCE DURING THE GREAT RECESSION
September 2014
Working Paper Number:
CES-14-36
Minority owned businesses are an increasing important component of the U.S. economy, growing at twice the rate of all U.S. businesses between 2002 and 2007. However, a growing literature indicates that minority-owned businesses may have been especially impacted by the Great Recession. As house prices declined, foreclosures fell disproportionately on urban minority neighborhoods and one of the sources of credit for business owners was severely constrained. Using 2002-2011 data from the Longitudinal Business Database linked to the 2002 Survey of Business Owners, this paper adds to the literature by examining the employment growth and survival of minority and women employer businesses during the last decade, including the Great Recession. At first glance, our preliminary findings suggest that black and women-owned businesses underperform white, male-owned businesses, that Asian-owned businesses outperform other groups, and that Hispanic-owned businesses outperform non-Hispanic ones in regards to employment growth. However, when we look only at continuing firms, black-owned businesses outperform white-owned businesses in terms of employment growth. At the same time, we also find that the recession appears to have impacted black-owned and Hispanic-owned businesses more severely than their counterparts, in terms of employment growth as well as survival. This is also the case for continuing black and Hispanic-owned firms.View Full Paper PDF
-
Working PaperBusiness Owners and the Self-Employed: 33 Million (and Counting!)
September 2025
Working Paper Number:
CES-25-60
Entrepreneurs are known to be key drivers of economic growth, and the rise of online platforms and the broader 'gig economy' has led self-employment to surge in recent decades. Yet the young and small businesses associated with this activity are often absent from economic data. In this paper, we explore a novel longitudinal dataset that covers the owners of tens of millions of the smallest businesses: those without employees. We produce three new sets of statistics on the rapidly growing set of nonemployer businesses. First, we measure transitions between self-employment and wage and salary jobs. Second, we describe nonemployer business entry and exit, as well as transitions between legal form (e.g., sole proprietorship to S corporation). Finally, we link owners to their nonemployer businesses and examine the dynamics of business ownership.View Full Paper PDF
-
Working PaperSchool Discipline and Racial Disparities in Early Adulthood
June 2021
Working Paper Number:
CES-21-14
Despite interest in the role of school discipline in the creation of racial inequality, previous research has been unable to identify how students who receive suspensions in school differ from unsuspended classmates on key young adult outcomes. We utilize novel data to document the links between high school discipline and important young adult outcomes related to criminal justice contact, social safety net program participation, post-secondary education, and the labor market. We show that the link between school discipline and young adult outcomes tends to be stronger for Black students than for White students, and that inequality in exposure to school discipline accounts for approximately 30 percent of the Black-White disparities in young adult criminal justice outcomes and SNAP receipt.View Full Paper PDF
-
Working PaperExiting Self-Employment: An Analysis of Asian Immigrant-Owned Small Businesses
November 1998
Working Paper Number:
CES-98-13
Part of the uniqueness of the immigrant Asian business community in the U.S. lies in the fact that many among the highly educated pursue self-employment in small-scale, low-yielding retail and personal service fields. This study analyzes owner departure for a nationwide sample of small businesses owned by Asian Indian and Filipino immigrants and a comparison group of Asian nonimmigrant firm owners. Controlling for firm and owner traits, highly educated Asian immigrant owners are more likely than others to exit self-employment over the 1987-1991 period; exit from traditional fields (retail and personal services) is pronounced. These exit patterns do not typify the comparison group. Findings are consistent with the hypothesis that self-employment is often a form of underemployment among Asian immigrants.View Full Paper PDF
-
Working PaperAnalysis of Young Small Firms That Have Closed: Delineating Successful from Unsuccessful Closures
October 2002
Working Paper Number:
CES-02-24
This study of small businesses created between 1989 and 1992, and then closed down between 1993 and 1996, reveals that owners often described their firms as 'successful' when the disclosure decision was made. . Theoretical explanations consistent with this pattern are explored in this study. One view describes successful closures as rational outcomes of learning processes undertaken by entrepreneurs opening firms amidst considerable uncertainty. Another approach sees the seeming paradox of successful closure in terms of alternative opportunities: if something better comes along, the entrepreneur may close down. Empirically, successful closure owners are found to be moving on to more attractive alternatives.View Full Paper PDF
-
Working PaperStartup Dynamics: Transitioning from Nonemployer Firms to Employer Firms, Survival, and Job Creation
April 2025
Working Paper Number:
CES-25-26
Understanding the dynamics of startup businesses' growth, exit, and survival is crucial for fostering entrepreneurship. Among the nearly 30 million registered businesses in the United States, fewer than six million have employees beyond the business owners. This research addresses the gap in understanding which companies transition to employer businesses and the mechanisms behind this process. Job creation remains a critical concern for policymakers, researchers, and advocacy groups. This study aims to illuminate the transition from non-employer businesses to employer businesses and explore job creation by new startups. Leveraging newly available microdata from the U.S. Census Bureau, we seek to gain deeper insights into firm survival, job creation by startups, and the transition from non-employer to employer status.View Full Paper PDF
-
Working PaperWho Files for Personal Bankruptcy in the United States?
January 2017
Working Paper Number:
CES-17-54
Who files for bankruptcy in the United States is not well understood. Previous research relied on small samples from national surveys or a small number of states from administrative records. I use over 10 million administrative bankruptcy records linked to the 2000 Decennial Census and the 2001-2009 American Community Surveys to understand who files for personal bankruptcy. Bankruptcy filers are middle income, more likely to be divorced, more likely to be black, more likely to have terminal high school degree or some college, and more likely to be middle-aged. Bankruptcy filers are more likely to be employed than the U.S. as a whole, and they are more likely to be employed 50-52 weeks. The bankruptcy population is aging faster than the U.S. population as a whole. Lastly, using the pseudo-panels I study what happens in the years around bankruptcy. Individuals are likely to get divorced in the years before bankruptcy and then remarry. Income falls before bankruptcy and then rises after bankruptcy.View Full Paper PDF
-
Working PaperNonemployer Statistics by Demographics (NES-D): Exploring Longitudinal Consistency and Sub-national Estimates
December 2019
Working Paper Number:
CES-19-34
Until recently, the quinquennial Survey of Business Owners (SBO) was the only source of information for U.S. employer and nonemployer businesses by owner demographic characteristics such as race, ethnicity, sex and veteran status. Now, however, the Nonemployer Statistics by Demographics series (NES-D) will replace the SBO's nonemployer component with reliable, and more frequent (annual) business demographic estimates with no additional respondent burden, and at lower imputation rates and costs. NES-D is not a survey; rather, it exploits existing administrative and census records to assign demographic characteristics to the universe of approximately 25 million (as of 2016) nonemployer businesses. Although only in the second year of its research phase, NES-D is rapidly moving towards production, with a planned prototype or experimental version release of 2017 nonemployer data in 2020, followed by annual releases of the series. After the first year of research, we released a working paper (Luque et al., 2019) that assessed the viability of estimating nonemployer demographics exclusively with administrative records (AR) and census data. That paper used one year of data (2015) to produce preliminary tabulations of business counts at the national level. This year we expand that research in multiple ways by: i) examining the longitudinal consistency of administrative and census records coverage, and of our AR-based demographics estimates, ii) evaluating further coverage from additional data sources, iii) exploring estimates at the sub-national level, iv) exploring estimates by industrial sector, v) examining demographics estimates of business receipts as well as of counts, and vi) implementing imputation of missing demographic values. Our current results are consistent with the main findings in Luque et al. (2019), and show that high coverage and demographic assignment rates are not the exception, but the norm. Specifically, we find that AR coverage rates are high and stable over time for each of the three years we examine, 2014-2016. We are able to identify owners for approximately 99 percent of nonemployer businesses (excluding C-corporations), 92 to 93 percent of identified nonemployer owners have no missing demographics, and only about 1 percent are missing three or more demographic characteristics in each of the three years. We also find that our demographics estimates are stable over time, with expected small annual changes that are consistent with underlying population trends in the U.S.. Due to data limitations, these results do not include C-corporations, which represent only 2 percent of nonemployer businesses and 4 percent of receipts. Without added respondent burden and at lower imputation rates and costs, NES-D will provide high-quality business demographics estimates at a higher frequency (annual vs. every 5 years) than the SBO.View Full Paper PDF
