Abstract
Little is known about self-employment as a career choice for women who marry a high-income spouse. Using rich Swedish register data, we show that Swedish women who are married to a high-income spouse are, on average, highly educated and more likely to pursue self-employment than those married to a spouse in the middle of the income distribution. Our results indicate that the likelihood of entering self-employment increases by 128–176% for women who marry a spouse in the top of the income distribution, and the shift into self-employment is associated with a lower income. This can be interpreted as a career choice that produces a more flexible work schedule in return for lower income. In a Nordic welfare state, where work is the norm for women, self-employment offers a way to avoid the stay-at-home stigma. It allows one to stay in the workforce while enjoying approval from society and being in control of one’s work schedule and personal demands.
Plain English Summary
This study shows that self-employment allows women to stay in the labor force and have control over their work-life balance. By staying in the labor force, they are able to avoid the stay-at-home stigma. Despite the increase in female labor force participation during the past century, gender equality appears to have stalled in the top 1%. Highly educated women are leaving the labor market to assume responsibility for their children while the husbands are pursuing their career. In Sweden, being a stay-at-home wife is met with social disapproval. One way to avoid the stay-at-home stigma while being in control of your work-life balance is to become self-employed. We show that the likelihood of entering self-employment increases by 128–176% for women who marry a spouse in the top of the income distribution, and the shift into self-employment is associated with a lower income. That women are abandoning a potential high-income career for low-income self-employment may be harmful to both society’s efforts to create a system with equal rights and opportunities, and for the economy’s potential growth rate.
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Notes
According to the Global Entrepreneurship Monitor (2017), men are more likely to be involved in entrepreneurial activities, regardless of a country’s economic development. Only in three countries, Indonesia, Brazil, and Malaysia, are women’s entrepreneurship rate equal or higher than that of men.
For further information on the LISA database, see http://www.scb.se/lisa-en.
In our measure of self-employment, the share of sole-proprietors is greater than the share of incorporated businesses. In Table A1, we see that in 2013, the share of incorporated business is larger for individuals that marry a spouse in the top of the income distribution.
One PPP USD = SEK 8.60 in 2013 (OECD, 2017b). Since 1993, the PPP adjusted currency conversion has oscillated between 8.60 and 9.50 SEK per USD.
The entire Swedish income distribution includes both men and women, and those that are unemployed or not in the labor force.
The age statistics are based on the median value in disposable income between 1995 and 2008, where income is equalized, meaning it is weighted based on household structure (see Table 12 in Statistics Sweden, 2008).
SEK 2,073,700 in 2013 is equivalent to 1,604,174 SEK in 1993 prices based on wage data on white collar workers from the Confederation of Swedish Enterprise (Svenskt Näringsliv, 2016). SEK 824,900 in 1993 and SEK 2,073,700 in 2013 is equivalent to USD 89,894 and USD 241,193, respectively, using the PPP adjusted currency conversion by OECD (2017b). In addition, USD 241,193 in 2013 is equivalent to EUR 182,100.
To allow for intertemporal comparability, income is expressed in 1993 prices based on wage data on white collar workers from the Confederation of Swedish Enterprise (Svenskt Näringsliv, 2016).
As a point of reference, official statistics estimate the average self-employment rate for all women 1993–2013 to 5.83% in Sweden and 6.11% in the U.S. (OECD, 2016b).
For further comparisons of educational level and number of children at home, before and after marriage, see Table A14 in the online Appendix.
See Section 4.1 for a further discussion.
We see in Table 3 that the treatment groups have a larger share of individuals living in the greater metropolitan areas. This warrants the inclusion of county fixed effects. There are 21 counties in Sweden, and since there are fairly large variations in industry structure and income and wealth dispersion in different parts of the country, the inclusion of county dummies will capture any effects from such structural differences.
This holds for marriage into the top 1 and 0.1%. Although not by much, the coefficient for − 2 years from marriage into the top 0.5% is statistically different from zero on the 5% level.
The estimated coefficient for marriage into the top 1% corresponds to an increase in the before-marriage rate of self-employment by 128% (from 2.46 to 5.61%).
See Table A16 in the online Appendix for summary statistics before and after marriage for control and treatment groups, excluding individuals with zero income.
The percentage increase is based on the before-marriage rate of self-employment.
With a log-linear model, the coefficienton a dummy variable can be interpreted as a percentage using the following transformation: \(100\times [{e}^{\beta }-1]\).
Pre-school has a maximum fee of SEK 1,362 per month (as of 2017) for the first child, which implies a subsidy rate in excess of 85%. For the second and third child, the subsidy rate is roughly 90 and 95%, respectively. Moreover, every family receives a monthly tax-free child allowance of SEK 1,050 per month for the first child from the government. The allowance is 1,200 for the second child and increases for every additional child until it reaches a maximum of 2,300 per month.
Other services provided by the Swedish welfare state include free education (also at the university level), free health care and free dental care until age 23.
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Acknowledgements
We are grateful to Niclas Berggren, Johan Egebark, Niklas Elert, Björn Tyrefors, Niklas Kaunitz, Johan P. Larsson, Martin Olsson, Jason Saving, Daniel Waldenström, and the participants at the EALE Annual Conference 2017, the 2018 Public Choice Society Meetings, and the seminars at the University of Memphis, and the Research Institute of Industrial Economics (IFN) for their valuable comments and suggestions. Financial support from the Swedish Research Council for Health, Working Life and Welfare (Forte) grant number 2014–2740, Jan Wallanders och Tom Hedelius stiftelse, and the Marianne and Marcus Wallenberg Foundation is gratefully acknowledged. We thank Olga Pugatsova and Charlotta Olofsson for their excellent research assistance, Petter Danielsson for assistance with data on employment rates for women, and Louise Ringström for inspiration.
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Bjuggren, C.M., Henrekson, M. Female self-employment: prevalence and performance effects of having a high-income spouse. Small Bus Econ 59, 163–181 (2022). https://doi.org/10.1007/s11187-021-00526-0
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DOI: https://doi.org/10.1007/s11187-021-00526-0