Essays on Female Self-Employment.

Abstract

This dissertation explores the determinants and consequences of self-employment among American women.

In the first essay, I quantify the value of self-employment as a flexible work alternative for mothers with young children and estimate the impact of self-employment experience on women's future employment and earnings. Using data from the NLSY79, I incorporate self-employment into a life-cycle model of married women's fertility and employment decisions. I find that mothers with preschool-aged children value the package of flexible amenities in self-employment at around $7,400 annually. My model suggests that this additional flexibility encourages mothers to switch from wage and salary employment to self-employment, which lowers their lifetime earnings. Overall, the findings suggest that workplace flexibility is highly valued by mothers and that it is an important driver of their fertility and employment decisions.

The second essay investigates the effect that young children have on women's likelihood of becoming self-employed. Using panel data from the Survey of Income and Program Participation, I show that the self-employment rate among women with a two year old child is 11-17 percent higher due to the birth of that child. I analyze time use data to show that self-employed women appear to have more flexibility in their work location, hours, and schedule. My findings suggest that self-employment itself allows women to spend more time with their children. These results contribute to a deeper understanding of the varied work decisions of women with young children.

The third essay, which is collaborative work with Katherine Michelmore, examines the effect of the Earned Income Tax Credit (EITC) on married women's decision to become self-employed. Using data from the Survey of Income and Program Participation, we find that increases in the EITC between 1990 and 2012 led to a 4 percentage point, or 50%, increase in married women's self-employment rates. We measure self-employment as working positive hours at a business, which provides evidence that this increase in self-employment is real work effort. Our results suggest that the EITC affects women's type of employment in addition to their overall labor force participation.