Abstract
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This paper asks how and why the transition rates for males between non-employment, paid employment, own-account self-employment, and self-employment with paid help changed in Canada between the 1990s and the 2000s. It is found that the self-employed were much less likely to move back into paid employment in the 2000s than they were in the 1990s. Estimates from a dynamic mixed multinomial logit model suggest that increased state dependence, not demographic change or changes in the industrial and occupational structure, accounts for the increased stability. Since the productivity of entrants has been found in the literature to be less than that of incumbents, the fact that there were more newly self-employed in the 1990s and that their businesses did not survive long is likely related to the poorer productivity performance of the self-employment sector in the 1990s compared to that of the self-employment sector in the 2000s.
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