Self-employment and local economic performance: Evidence from US counties

This study explores the relationship between self-employment and income growth, employment growth, and change in poverty in metro and non-metro areas in the United States using county-level panel data. We investigate the impact of the relative size of the self-employment sector measured by the share of non-farm proprietorships (NFPs) in total full and part-time employment on three key economic performance indicators. We first estimate an income growth model to analyse the effects of self-employment on income growth. Then we investigate the independent effects of self-employment on employment growth and changes in family poverty rates. Our results indicate that higher self-employment rates are associated with statistically significant increases over time in income and employment growth, and reductions in poverty rates in non-metro counties. We find similar effects on metro county income and employment, but not on poverty dynamics.