Self-Employment Dynamics and Self-Employment Trends: A Study of Canadian Men and Women, 1982-1995

Self-employment has risen dramatically in Canada, accounting for a disproportionate share of job growth since the 1980's. Using hitherto-unexploited information on labour force transitions from 13 waves of the Survey of Consumer Finances between 1982 and 1995, we show that the changes in transition patterns underlying these increases were very different for women and men. For women, most of the increase in self-employment is attributable to an increase in their retention rates in self-employment. For men, most is attributable to a decrease in the stability of paid employment, i.e. a rise in transitions from employment to non-employment. This generates an increase in self-employment because non-employed men are much more likely than employed men to enter self-employment. Changes in demographic characteristics account for very little of these altered transition probabilities. Somewhat paradoxically, self-employment thus rose both in secularly improving (women's) and deteriorating (men's) labour markets, due to different changes in the underlying transition processes.