Setting up shop: Self-employment amongst Canadian college and university
graduates
by Ross Finnie, Christine
Laporte and Maud-Catherine Rivard
Business and Labour Market Analysis Division
Analytical
Studies Branch research paper series, No. 183
Changes in the labour market
such as an increase in the incidence of part-time, part-year work, multiple job
holding and self-employment have often been conjectured as demand-driven shifts — that
is, that they have resulted from a lack of more traditional job opportunities
rather than in response to worker's changing preferences. Yet while the issue
of non-standard work is an interesting and important one, there is relatively
little existing empirical evidence on the topic.
The general purpose of
this paper is to report the results of an empirical analysis that exploits the
self-employment status indicator available in the National Graduates Survey (and
Follow-Up) databases. It documents and analyses the patterns of self-employment
amongst several cohorts of Canadian post-secondary graduates in the first five
years following graduation. More specifically, it provides solid empirical documentation
of the incidence of self-employment (levels, patterns, trends) amongst recent
college and university graduates, overall, and broken down by degree level, sex
and year of graduation. This paper also addresses the issue of whether self-employment
tends to be the preferred employment option (for those who enter it), or the result
of a lack of suitable "conventional" employment opportunities, or some
combination of the two.
There are two over-arching conclusions to be drawn
from the analysis. First, the incidence of self-employment was relatively stable
for the first three cohorts of graduates covered in the analysis. The overall
rates ranged from 6.5 to 11.1 percent amongst male graduates and from 3.2 to 6.7
percent for females. The rates tended to be higher for some (but not all) graduates
of the most recent cohort (graduates of 1995).
Second, the evidence generally
points to self-employment representing a relatively attractive job status on average:
- For every cohort the rates of self-employment rise from the first interview
following graduation (after two years) to the second (after five years), an interval
over which job opportunities generally improve significantly for graduates;
- Simple
point-in-time (cross-sectional) comparisons of earnings, the job-education skill
match, and job satisfaction levels suggest that although the results are somewhat
mixed, there is little evidence that the self-employment status is generally characterized
by less favourable outcomes, and is perhaps particularly marked by generally higher
(not lower) overall levels of job satisfaction.
Finally, both the
conventional cross-sectional earnings model and the difference equations which
control for various fixed effects with which job status might be correlated, further
point to self-employment being a higher-paying (and therefore more attractive)
job status than the conventional paid worker status.
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