Wage uncertainty and the labour supply of self-employed workers

S C Parker, Y Belghitar, T Barmby

Research output: Contribution to journalArticle

46 Citations (Scopus)

Abstract

We analyse the effects of wage uncertainty on the labour supply of self-employed workers, using PSID data on self-employed American males. The standard deviation of past wages, as a measure of wage uncertainty, is the key determinant of male self-employed labour supply, with a significant positive effect. In contrast there is no effect from the (instrumented) wage or other explanatory variables. Our findings are consistent with the self-employed 'self-insuring' in response to greater uncertainty by working longer hours, and they can also help explain why self-employed Americans work longer average hours for lower average wages than their employee counterparts.

Original languageEnglish
Pages (from-to)C190-C207
Number of pages18
JournalEconomic Journal
Volume115
Issue number502
DOIs
Publication statusPublished - Mar 2005

Keywords

  • risk
  • behavior
  • entrepreneurship
  • dentists
  • entry

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