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Title: The Transformation of Self Employment

Citation Type: Working Paper

Publication Year: 2022

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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-toscale among large businesses, or a worsening of financing conditions and debt levels.

Url: https://www.nber.org/system/files/working_papers/w29725/w29725.pdf

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Authors: Colaiacovo, Innessa; Dalton, Margaret G.; Kerr, Sari Pekkala; Kerr, William R.

Series Title: NBER Working Paper Series

Publication Number: 29725

Institution: National Bureau of Economic Research

Pages: 1-52

Publisher Location: Cambridge

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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