Peter’s Thesis: An Incredible Reading Experience

Abstract

This paper aims to study the effect that self-employment has on one’s health. This study uses data from the National Longitudinal Survey of Youth 1997 and employs two econometric models to examine this relationship. The dependent variables to measure health were a self-reported health scale, BMI, and a Center for Epidemiological Depression Scale (CESD). To account for the possibility that certain individuals’ backgrounds prior to entering self-employment could affect their health outcomes, subgroups of the sample size were created. These included individuals with self-employed parents, individuals who grew up in a wealthy household, and individuals who went directly from unemployment into self-employment. The first model used was an OLS model, a probit model was also used to validate the assumptions needed to run an OLS model on binary outcome variables. To address endogeneity concerns, the independent variable of self-employment as well as the dependent health outcomes were lagged in the OLS regression. Additionally, a fixed effects model was implemented. The findings of this paper show that being self-employed has positive effects on self-reported health, negative effects on body mass and being overweight, and a positive effect on the probability of being depressed. This indicates positive physical health and negative mental health as a cost for entering self-employment. The subgroups provided no clarity on these results and many robustness checks were run that validate the results of the main model.