Self-Employment in Japan: A Microanalysis of Personal Profiles

We use unique data from the private Keio Household Panel Survey to explore profiles of the self-employed in Japan, separately for men and women. We analyze labor market conditions at the time of work force entry as well as personal markers such as age, education, work experience, assets, and family situation. The most persistent finding is that Japan’s labor market continues to be ‘sticky’. For the period 1963–2004, those in self-employment tended to be less educated, older, and less likely to have gathered prior experience through job-hopping. Having a self-employed father also loomed large. In contrast, for 2004–2007, younger age together with assets and possibly young children are associated with self-employment. While the profiles for women with only a high school degree and all men are similar , results for women with a college degree differ consistently, suggesting that educated females face a different choice set in entering self-employment. Finally, we support the determinative nature of Japan’s job market: entering the labor force at a time of weak local labor market conditions significantly increases the odds of becoming self-employed and remaining so in the long run.