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The Role of Employer-Employee Interactions in Labor Market Cycles: Evidence from the Self-Employed

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  • Carrington, William J
  • McCue, Kristin
  • Pierce, Brooks

Abstract

Self-employed workers are less likely to be affected by implicit contracts, efficiency wages, and other forces that mute wage cyclicality and exacerbate employment cyclicality. This observation motivates the authors' comparison of the cyclical experience of the self-employed with 'wage and salary' workers who clearly have an employer. They find negligible or small differences in annual hours cyclicality between the two groups, but hourly wages and annual earnings are much more cyclical for the self-employed. These results are consistent with efficient contracting models where employers smooth workers' income without causing inefficiencies in hours of work. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Carrington, William J & McCue, Kristin & Pierce, Brooks, 1996. "The Role of Employer-Employee Interactions in Labor Market Cycles: Evidence from the Self-Employed," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 571-602, October.
  • Handle: RePEc:ucp:jlabec:v:14:y:1996:i:4:p:571-602
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    References listed on IDEAS

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    Cited by:

    1. Kawaguchi, Daiji, 2008. "Self-Employment Rents : Evidence from Job Satisfaction Scores," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 49(1), pages 35-45, June.
    2. Falco, Paolo & Maloney, William F. & Rijkers, Bob & Sarrias, Mauricio, 2015. "Heterogeneity in subjective wellbeing: An application to occupational allocation in Africa," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 137-153.
    3. Ingrid Verheul & Martin Carree & Roy Thurik, 2009. "Allocation and productivity of time in new ventures of female and male entrepreneurs," Small Business Economics, Springer, vol. 33(3), pages 273-291, October.
    4. van Ommeren, Jos N. & van der Straaten, J. Willemijn, 2008. "The effect of search imperfections on commuting behaviour: Evidence from employed and self-employed workers," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 127-147, March.
    5. Pencavel, John, 2015. "The labor supply of self-employed workers: The choice of working hours in worker co-ops," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 677-689.
    6. Andrew E. Clark & Nathalie Colombier & David Masclet, 2008. "Never the same after the first time: The satisfaction of the second-generation self-employed," Working Papers halshs-00586826, HAL.
    7. Benjamin A. Campbell, 2013. "Earnings Effects of Entrepreneurial Experience: Evidence from the Semiconductor Industry," Management Science, INFORMS, vol. 59(2), pages 286-304, February.
    8. Pedro Albarran & Raquel Carrasco & Maite Martinez-Granado, 2009. "Inequality for Wage Earners and Self-Employed: Evidence from Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(4), pages 491-518, August.
    9. Andrew Clark & Nathalie Colombier & David Masclet, 2008. "Never the same after the first time: the satisfaction of the second-generation self-employed," International Journal of Manpower, Emerald Group Publishing, vol. 29(7), pages 591-609, November.
    10. C. Praag & Peter Versloot, 2007. "What is the value of entrepreneurship? A review of recent research," Small Business Economics, Springer, vol. 29(4), pages 351-382, December.
    11. Hyytinen, Ari & Ilmakunnas, Pekka & Toivanen, Otto, 2013. "The return-to-entrepreneurship puzzle," Labour Economics, Elsevier, vol. 20(C), pages 57-67.
    12. Ingrid Verheul & Martin Carree & Roy Thurik, 2008. "Allocation and Productivity of Time in new Ventures of Female and Male Entrepreneurships," Papers on Entrepreneurship, Growth and Public Policy 2006-01, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    13. Mirko Felchner, 2015. "Einkommensdynamik bei Selbständigen als Freie Berufe und abhängig Beschäftigte Eine dynamische Paneldatenschätzung mit Daten des Sozio-oekonomischen Panels," FFB-Discussionpaper 101, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    14. Shin, Donggyun & Shin, Kwanho, 2008. "Why Are The Wages Of Job Stayers Procyclical?," Macroeconomic Dynamics, Cambridge University Press, vol. 12(01), pages 1-21, February.
    15. Dominik Hanglberger & Joachim Merz, 2015. "Does self-employment really raise job satisfaction? Adaptation and anticipation effects on self-employment and general job changes," Working Papers 385, ECINEQ, Society for the Study of Economic Inequality.
    16. Daiji Kawaguchi, 2002. "Compensating Wage Differentials among Self-Employed Workers:Evidence from Job Satisfaction Scores," ISER Discussion Paper 0568, Institute of Social and Economic Research, Osaka University.
    17. Hyytinen, Ari & Ruuskanen, Olli-Pekka, 2006. "What makes an entrepreneur independent? Evidence from time use survey," Discussion Papers 1029, The Research Institute of the Finnish Economy.
    18. William Stull, 2014. "Taking the Plunge: Teaching the Microeconomics of Entrepreneurship," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 20(2), pages 139-150, May.
    19. Dawson, C G, 2014. "Optimism, Job Satisfaction and Self-Employment," Department of Economics Working Papers 39313, University of Bath, Department of Economics.
    20. Burmeister-Lamp, Katrin & Lévesque, Moren & Schade, Christian, 2012. "Are entrepreneurs influenced by risk attitude, regulatory focus or both? An experiment on entrepreneurs' time allocation," Journal of Business Venturing, Elsevier, vol. 27(4), pages 456-476.
    21. repec:kap:iaecre:v:20:y:2014:i:2:p:139-150 is not listed on IDEAS

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