Self-employment, entrepreneurship, and the NLSY79: researchers have used the rich data from the 1979 cohort of the National Longitudinal Survey of Youth to investigate the relationship between self-employment and various job and earnings outcomes; future inquiry may afford valuable insights into other interesting consequences of self-employment

Monthly Labor Review, Feb, 2005 by Robert W. Fairlie

(3) See, for example, Richard Kihlstrom and Jean-Jacques Laffont, "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, vol. 87, no. 4, 1979, pp. 719-48; Robert E. Lucas," On the Size Distribution of Firms," Bell Journal of Economics, vol. 9, no. 2, 1978, pp. 508-23; Boyan Jovanovic, "Selection and the Evolution of Industry," Econometrica, vol. 50, no. 3, 1982, pp. 649-70; and David Evans and Boyan Jovanovic, "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, vol. 97, no. 4, 1989, pp. 808-27.

(4) Robert W. Fairlie, "Drug Dealing and Legitimate Self-Employment," Journal of Labor Economics, vol. 20, no. 3, 2002, pp. 538-67.

(5) Ibid.

(6) Ibid.

(7) Ellen R. Rissman, "Self-Employment as an Alternative to Unemployment," working paper no. 2003-34 (Chicago, Federal Reserve Bank of Chicago, 2003).

(8) Ibid.

(9) Marianne A. Ferber and Jane Waldfogel, "The long-term consequences of nontraditional employment," Monthly Labor Review, May 1998, pp. 3-12.

(10) Donald R. Williams, "Youth Self-Employment: Its Nature and Consequences," Small Business Economics, vol. 23, no. 4, 2004, pp. 323-36.

(11) All estimates are calculated with annual sample weights provided by the NLSY. "Nonemployment" denotes those not in the labor force.

(12) See, for example, Evans and Jovanovic, "Estimated Model of Entrepreneurial Choice"; David Evans and Linda Leighton, "Some Empirical Aspects of Entrepreneurship," American Economic Review, vol. 79, no. 3, 1989, pp. 519-35; Douglas Holtz-Eakin, David Joulfaian, and Harvey Rosen, "Entrepreneurial Decisions and Liquidity Constraints," Rand Journal of Economics, vol. 23, no. 2,1994 pp. 334-47; Thomas A. Dunn and Douglas J. Holtz-Eakin, "Financial Capital, Human Capital, and the Transition to Self-Employment: Evidence from Intergenerational Links," Journal of Labor Economics, vol. 18, no. 2, 2000, pp. 82-305; Robert W. Fairlie, "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, vol. 17, no. 1, 1999, pp. 80-108; and Erik Hurst and Annamaria Lusardi, "Liquidity Constraints, Household Wealth, and Entrepreneurship," Journal of Political Economy, vol. 112, no. 2, 2004, pp. 319-47.

(13) Fairlie, "Drug Dealing."

(14) The variable having to do with assets is not available in the public-use data, but can be obtained from Jay L. Zagorsky at the Center for Human Resource Research. See Jay L. Zagorsky, "Young Baby Boomers' Wealth," working paper (Columbus, OH, Center for Human Resource Research, 1998), for more details on the construction of this variable.

(15) Hiromi Taniguchi, "Determinants of Women's Entry into Self-Employment, "Social Science Quarterly, vol. 83, no. 3, 2002, pp. 875-93.

(16) Fairlie, "Does Business Ownership Provide a Source of Upward Mobility for Blacks and Hispanics?"

(17) Telephone conversation, August 1999.

(18) Especially problematic is the fact that 36 individuals have top-coded wage and salary income of more than $4 million each in 1996.