Wage uncertainty and the labour supply of self-employed workers

Parker, S.C.; Barmby, T.; Belghitar, Y.

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.

Citation

Parker, S., Barmby, T., & Belghitar, Y. (2005). Wage uncertainty and the labour supply of self-employed workers. The Economic Journal, 115(502), C190-C207. https://doi.org/10.1111/j.0013-0133.2005.00987.x

• Journal Article Type: Article
• Publication Date: 2005-03
• Deposit Date: Apr 3, 2007
• Journal: The Economic Journal
• Print ISSN: 0013-0133
• Electronic ISSN: 1468-0297
• Publisher: Oxford University Press
• Peer Reviewed: Peer Reviewed
• Volume: 115
• Issue: 502
• Pages: C190-C207
• DOI: https://doi.org/10.1111/j.0013-0133.2005.00987.x
• Public URL: https://durham-repository.worktribe.com/output/1624945