Panel Paper: Is Self-Employment a Flexible Alternative to Wage and Salary Employment for Mothers?

Saturday, November 8, 2014 : 4:10 PM
Nambe (Convention Center)

*Names in bold indicate Presenter

Katherine C. Lim, University of Michigan
Mothers of young children often reduce their labor supply to manage household responsibilities.  Workplace flexibility is an important determinant of these labor supply decisions that have lasting implications for future labor force participation and earnings.  This paper explores self-employment as a work option that can provide flexibility along multiple dimensions while maintaining labor force participation for women.  First, I show that self-employed women appear to have more flexibility in their work location, hours, and schedule than wage and salary women using data from the American Time Use Survey.  Second, I demonstrate that young children have a positive effect on self-employment propensity that is both statistically and economically significant.  The results imply that the self-employment rate among women with a 1 year old child is 14% higher due to the birth of that child.  I explore differences in this relationship by marital status, education levels and occupation to provide more detail surrounding the decision to become self-employed. The results contribute to a deeper understanding of the varied work decisions women with young children make, which will inform policies related to child care, workplace flexibility, and programs to promote self-employment.