Female self-employment has risen strongly over the last few decades and has become
an important labor market development. The few studies that have examined women's
decision to become self-employed indicate that this decision is complex. Women are
more likely than men to shoulder family-related obligations, especially child rearing,
and there is evidence that this affects some women's propensity to become self-employed.
Also, women have yet to achieve full economic parity with men in wage employment.
How gender inequality in wage earnings may precipitate some women's selection out
of wage employment and into self-employment is examined. It is found that women's
lower wage returns to observed worker characteristics have a positive and significant
effect on women's decision to switch from wage employment to self-employment.