New Evidence on Self-Employment and Workplace Flexibility for US Mothers

Mothers of young children often reduce their labor supply to manage household responsibilities. Workplace flexibility is an important determinant of these labor supply decisions that have lasting implications for future labor force participation and earnings. This paper provides new evidence that self-employment is a work option that mothers use to gain flexibility along multiple dimensions while maintaining labor force participation. First, I demonstrate that young children have a positive effect on self-employment propensity that is both statistically and economically significant using data from the Survey of Income and Program Participation. The results imply that the self-employment rate among women with a two year old child is 11-16 percent higher due to the birth of that child. Second, I show that self-employed women appear to have more flexibility in their work location, hours, and schedule than wage and salary women using data from the American Time Use Survey. My findings suggest that self-employment itself allows women to spend more time with their children even while working the same number of hours. These results contribute to a deeper understanding of the varied work decisions women with young children make, which will inform policies related to child care, workplace flexibility, and programs to promote self-employment. ∗I would like to thank Kevin Stange, Jeff Smith, Brian McCall, and Martha Bailey for their mentorship and advice. I am grateful to Austin Davis, Gaurav Khanna, Gretchen Lay, Katherine Michelmore, and seminar participants at the University of Michigan and the APPAM Conference who have provided countless helpful comments. Any errors are my own. †Department of Economics, University of Michigan email: [email protected].