Self-employed women and time use

The 20th century saw a dramatic increase in the number of women in the labor force. This increase in labor force participation represents a striking change in the allocation of women's time between work and home activities. The flexibility afforded by self-employment is often regarded as a way to better balance work and home activities. However, just as little is known about the nonmarket activities of women, little is known about the differences in time allocations between self-employed women and women employed in other organizations. The number of self-employed women has increased steadily over the past three decades. Self-employment rates for women also show a proportional increase over the last 35 years, compared with men's self-employment. Whereas the self-employment rate for women was 42 percent of the rate for men in 1979, it remained near 55 percent from 1994 to 2003. In 2003, 6.8 percent of women in the labor force were self-employed, compared with 12.4 percent of men.1 These trends persist despite widespread policies to encourage business ownership among subgroups such as women. A better understanding of what motivates self-employed women and how they balance work and family time could increase the effectiveness of these policies.Time-use data from 2003 to 2006 provide convincing evidence that the time-use patterns of self-employed women differ substantially from those of men and wage-and-salary- employed women. Self-employed women spent less time in work-related activities and more time providing child care, especially "secondary" child care, in which a parent is at the same location as the child but is primarily engaged in another activity (e.g., work or household activities). The results also suggest that the factors affecting entry into self-employment differ for men and women. Based on U.S. Current Population Survey data for 1996 to 2006, and controlling for a number of factors including marital status, age, and education, women are about 57 percent less likely than men to enter self-employment. Entry rates are lowest among African-American and foreign-born women, relative to men. Women with more advanced degrees are more likely to enter self-employment, especially those in the financial industries, education and health sectors, and other service categories. Contrary to results in previous studies, this study finds that, relative to men, higher-earning women are slightly more likely to enter self-employment than their lower-earning peers. Further, entry rates do not differ between women who are not in the labor force and those previously employed in wage-and-salary jobs. Weak evidence also supports the claim that women are less likely to enter from unemployment. The results suggest that the development of policies that enhance work-life balance, focus on offsetting racial disparities in self-employment, and increase human capital through the accumulation of education would serve to encourage women to enter into self-employment. Relative to men, women who have high earnings in the wage-and-salary sector enter self-employment at higher rates than women with lower earnings in the wage-and-salary sector. This is not definitive evidence that women and men are equally motivated by earnings factors, but it does suggest that the lower rates of self-employment among women are not more severe for high-ability women, as suggested by the previous literature. However, further research is needed to establish the earnings of these women after they enter self-employment.