The Daily. Thursday, March 21, 2002

Self-employment among college and university graduates

This research paper documents patterns of self-employment among four groups of post-secondary graduates (college, bachelor's, master's, doctorate) in the five years immediately following their graduation.

According to data from the National Graduates Survey, rates of self-employment were relatively stable for the first three cohorts of graduates covered in this report - those who finished their programs in 1982, 1986 and 1990.

For these graduates, at all levels taken together, self-employment rates two years after graduation ranged from 6.5% to 7.8% for men, and from 3.2% to 5.2% for women.

Five years after graduation, the range had increased to between 9.9% and 11.1% among men, and between 5.3% and 6.7% among women.

The rates showed no discernible trend across these first three cohorts of graduates, including those who entered the labour market in the midst of the prolonged recession in the first part of the 1990s.

For the most recent graduates, however - those who finished in 1995 - the incidence of self-employment generally rose, although unevenly and not in all cases. By 1997, self-employment rates ranged from 6.9% to 12.0% for men, and from 5.2% to 13.3% for women.

Self-employment rates were generally higher for male graduates than females. The greater and more uniform increases for the 1995 cohort were, however, among women. Furthermore, the gender pattern reverses at the doctorate level. Among 1995 doctoral graduates, for example, 13.3% of women were self-employed in 1997, almost double the percentage of men with doctorates (6.9%). In contrast, of the 1995 master's graduates surveyed, 12.0% of men and 9.7% of women were self-employed in 1997.

Analysis of factors such as employment rates, earnings levels, job satisfaction, and the job-education skill match suggests that self-employment status is generally associated with enhanced labour market outcomes rather than a limited availability of regular paid positions.

For example, although the results are mixed, self-employed graduates tended to report higher earnings, closer job-education job matches, and greater work satisfaction than did paid workers.

Similarly, graduates who moved into self-employment from paid positions in the two to five years following graduation were more likely to show improvements in these outcome measures. The fact that individuals are drawn towards self-employment as employment rates improve over their early post-graduation careers provides further evidence of this.

In short, the evidence supports the "pull" rather than the "push" hypothesis. That is, individuals appear to be drawn towards self-employment by the opportunities this status offers rather than pushed into it due to an absence of other options.

The research paper Setting up shop: Self-employment amongst Canadian college and university graduates, no. 183 (11F0019MIE, free) is now available on Statistics Canada's Web site (). From the Our products and services page, choose Research papers (free), then Social conditions. It is also available from Human Resources Development Canada on the Applied Research Branch's Web page (www.hrdc-drhc.gc.ca/arb).

For more information, or to enquire about the concepts, methods or data quality of this release, contact Ross Finnie (613-951-3962; ref@qsilver.queensu.ca), Business and Labour Market Analysis Division.