Table 3.
Determinants of Labor-Force Transitions From Not Working or Retired to Working in Self-Employment Versus Wage and Salary Employment
| Probability of Transitioning to Self-Employment at Time t + 2 From State at Time t |
||||
|---|---|---|---|---|
| Model 1: Unemployed or Disabled |
Model 2: Retired |
|||
| Covariate | Marginal Effect | M | Marginal Effect | M |
| Job characteristics | ||||
| Prior job | ||||
| Self-employed | 0.322** | 0.142 | 0.375** | 0.156 |
| Full-time | 0.059 | 1.065 | −0.058 | 1.111 |
| Pension coverage | −0.048 | 0.168 | −0.026 | 0.322 |
| Hours/week | 0.001 | 30.623 | −0.001 | 31.434 |
| Weeks/year | 0.001 | 37.303 | 0.002 | 38.922 |
| Tenure | −0.001 | 6.845 | 0.001 | 12.889 |
| Occupation (professional/managerial) | ||||
| Sales | −0.073 | 0.106 | −0.151** | 0.097 |
| Clerical/administrative support | −0.038 | 0.162 | −0.009 | 0.127 |
| Services | 0.007 | 0.169 | −0.033 | 0.118 |
| Farming/forestry/fisheries | −0.050 | 0.020 | −0.217 | 0.026 |
| Mechanic, construction, operator | 0.086 | 0.192 | 0.003 | 0.223 |
| Armed forces | −0.135 | 0.002 | ||
| Industry (agriculture) | † | |||
| Mining and construction | −0.063 | 0.058 | −0.074 | 0.063 |
| Manufacturing | 0.001 | 0.142 | −0.201 | 0.148 |
| Transportation | 0.021 | 0.039 | −0.255* | 0.084 |
| Wholesale and retail trade | 0.070 | 0.188 | −0.175 | 0.135 |
| Finance, insurance, and real estate | 0.032 | 0.062 | −0.158 | 0.048 |
| Business and repair services | −0.004 | 0.058 | −0.096 | 0.048 |
| Personal services | −0.010 | 0.075 | −0.087 | 0.043 |
| Entertainment and recreation | 0.087 | 0.015 | −0.232 | 0.010 |
| Professional and related services | 0.032 | 0.173 | −0.259* | 0.190 |
| Public administration | −0.132 | 0.012 | −0.166 | 0.052 |
| Wealth and risk aversion | ||||
| Wealth quartile (quartile 1) | †† | |||
| Quartile 2 | 0.079* | 0.251 | 0.022 | 0.251 |
| Quartile 3 | 0.075 | 0.250 | 0.099* | 0.250 |
| Quartile 4 | 0.151** | 0.249 | 0.237** | 0.249 |
| Ever received lump sum from various sources |
0.072* | 0.270 | 0.002 | 0.369 |
| Least risk averse | −0.018 | 0.151 | 0.071 | 0.092 |
| Demographics and other covariates | ||||
| Male | −0.015 | 0.253 | 0.067* | 0.553 |
| Married | 0.075* | 0.814 | 0.050 | 0.790 |
| Cohort | 0.139** | 3.102 | −0.058 | 2.829 |
| Age group (51 to 55 years) | ||||
| 56 to 60 years | 0.066* | 0.299 | −0.022 | 0.201 |
| 61 to 65 years | 0.093* | 0.112 | −0.097* | 0.331 |
| 66 years and older | 0.191* | 0.041 | −0.064 | 0.346 |
| Education level (high school degree) | † | |||
| No degree | 0.046 | 0.275 | 0.065 | 0.203 |
| Bachelor’s degree | 0.107* | 0.120 | 0.091* | 0.143 |
| Master’s degree | −0.086 | 0.035 | 0.155** | 0.076 |
| JD/MD/PhD | 0.222 | 0.010 | 0.126 | 0.022 |
| Health limits work | 0.015 | 0.245 | 0.029 | 0.267 |
| Household income quartile (quartile 1) | ||||
| Quartile 2 | −0.062 | 0.254 | −0.025 | 0.250 |
| Quartile 3 | −0.039 | 0.246 | −0.012 | 0.250 |
| Quartile 4 | 0.074 | 0.249 | −0.042 | 0.250 |
| Own health insurance no retiree benefits | −0.116 | 0.023 | −0.121* | 0.065 |
| Spousal health insurance | −0.013 | 0.029 | −0.060 | 0.033 |
| Own health insurance with retiree | 0.215 | 0.013 | ||
| Other and government health insurance | 0.079** | 0.251 | 0.025 | 0.542 |
| Survey wave at t (wave 1 [1992]) | † | |||
| Wave 2 (1994) | −0.037 | 0.182 | −0.080 | 0.121 |
| Wave 3 (1996) | −0.059 | 0.148 | −0.122* | 0.137 |
| Wave 4 (1998) | −0.120** | 0.170 | −0.169** | 0.193 |
| Wave 5 (2000) | −0.107* | 0.120 | −0.122* | 0.217 |
| Wave 6 (2002) | −0.035 | 0.129 | −0.070 | 0.224 |
| Sample size (n) | 1,362 | 1,806 | ||
| Pseudo-R2 | .135 | .163 | ||
| Baseline probability | .267 | .378 | ||
Source: Authors’ calculations on the basis of the Health and Retirement Study, 1992 to 2004.
Note: The sample for model 1 was workers who were unemployed or disabled at time t and working at time t + 2. The sample for model 2 was workers who were retired at time t and working at t + 2. Huber standard errors were used.
*
Statistically significant at the 5% level.
**
Statistically significant at the 1% level.
†
Jointly significant at the 5% level.
††
Jointly significant at the 1% level.