Table 4.
Determinants of Labor Force Transitions From Wage and Salary Work to Self-Employment
| Probability of Transitioning From Wage and Salary Work at Time t to Self-Employed at Time t + 2 |
||
|---|---|---|
| Covariate | Marginal Effect | M |
| Job characteristics | ||
| Number of employees (fewer than 6) | †† | |
| 6 to 25 | −0.011** | 0.099 |
| 26 and above | −0.029** | 0.848 |
| Tenure (years) | 0.000 | 12.547 |
| Hourly wage rate quartile (quartile 1) | †† | |
| Quartile 2 | −0.001 | 0.251 |
| Quartile 3 | 0.002 | 0.258 |
| Quartile 4 | 0.013** | 0.254 |
| Occupation (professional and managerial) | †† | |
| Sales | 0.012** | 0.078 |
| Clerical/administrative support | −0.007* | 0.188 |
| Services | −0.001 | 0.156 |
| Farming/forestry/fisheries | −0.002 | 0.015 |
| Mechanic, construction, operator | −0.007** | 0.228 |
| Industry (agriculture) | † | |
| Mining | 0.038** | 0.040 |
| Manufacturing | 0.009 | 0.172 |
| Transportation | 0.011 | 0.066 |
| Wholesale and retail trade | 0.007 | 0.145 |
| Finance, insurance, and real estate | 0.015 | 0.061 |
| Business and repair services | 0.017 | 0.050 |
| Personal services | 0.027 | 0.032 |
| Entertainment and recreation | 0.005 | 0.017 |
| Professional and related services | 0.005 | 0.323 |
| Public administration | 0.002 | 0.057 |
| Has pension on current job | −0.023** | 0.625 |
| Wealth and risk aversion | ||
| Wealth quartile (quartile 1) | †† | |
| Quartile 2 | 0.002 | 0.258 |
| Quartile 3 | 0.008* | 0.254 |
| Quartile 4 | 0.018** | 0.237 |
| Ever received pension cash-out | 0.016* | 0.020 |
| Ever received inheritance | 0.005** | 0.188 |
| Ever received insurance settlement | 0.003 | 0.053 |
| Least risk averse | 0.007* | 0.133 |
| Demographics and other covariates | ||
| Male | 0.011** | 0.445 |
| Married | 0.000 | 0.799 |
| Cohort | −0.002 | 3.102 |
| Age group (51 to 55 years) | † | |
| 56 to 60 years | 0.000 | 0.340 |
| 61 to 65 years | 0.007* | 0.153 |
| 66 years and older | −0.002 | 0.079 |
| Education level (high school degree) | ||
| No degree | 0.000 | 0.168 |
| Bachelor’s degree | 0.003 | 0.175 |
| Master’s degree/MBA | 0.007 | 0.077 |
| PhD/JD/MD | 0.005 | 0.028 |
| Health limits work | 0.011** | 0.078 |
| Own health insurance no retiree benefits | −0.005 | 0.070 |
| Spousal health insurance | −0.001 | 0.021 |
| Own health insurance with retiree benefits | −0.007 | 0.017 |
| Other and government health insurance | 0.000 | 0.165 |
| Survey wave at t (wave 1 [1992]) | † | |
| Wave 2 (1994) | 0.003 | 0.169 |
| Wave 3 (1996) | −0.004 | 0.146 |
| Wave 4 (1998) | −0.008* | 0.192 |
| Wave 5 (2000) | −0.001 | 0.156 |
| Wave 6 (2002) | 0.008 | 0.133 |
| Sample size (n) | 25,879 | |
| Pseudo-R2 | .082 | |
| Baseline probability | .030 | |
Source: Authors’ calculations on the basis of the Health and Retirement Study, 1992-2004.
Note: The sample was composed of workers who were wage and salary workers at time t and working at time 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.