Title: Microentrepreneurship and the business cycle
Description: "This paper links employment dynamics to the business cycle in order to examine the voluntary nature of self-employment in Argentina.  Our results suggest that the transition to self-employment is more common during recessions and that the likelihood of becoming self-employed increases with the length of the recession and the unemployment duration.  We find that the majority of self-employed workers do not have employees and earn significantly less than salaried workers.  Individuals in this sector are often young and less educated and have trouble obtaining a salaried position regardless of the macroeconomic conditions.  Middle-aged, college-educated individuals also tend to enter self-employment as a temporary refuge when they encounter difficulties during a recession.  Our results suggest, however, that for entrepreneurs who have employees, entry into self-employment is procyclical and voluntary and has characteristics similar to those predicted for highly skilled risk-taking entrepreneurs.  Including idiosyncratic entrepreneurial abilities in a standard job search model allows us to predict such labor market segmentation and the cyclical pattern of entrance into self-employment"--Federal Reserve Bank of Atlanta web site.