Why women earn less than men in self-employment

Data from a sample of 659 selfemployed individuals are used to evaluate explanations for the large earnings differential between selfemployed men and women. A signifi-cant portion of the differential is attributed to differences in the industrial distribution of businesses and to the differential effects of housework and family responsibilites on the earnings of males and females. Differences due to industry position are traced to the lower proportions of women in the relatively rewarding areas of construction and professional practice and their greater representation in the relatively unrewarding personal services sector. Women in selfemployment appear to be burdened by house-work and childrearing in ways that limit the scope of their selfemployed businesses and the intensity of work effort in them. If selfemployed women were to have their total hours of labor redistributed between market work and house work in the same man-ner as men, their selfemployed earnings would be substantially increased. A portion of the differential is traceable to differences in financial capital (femalerun business have smaller capital stocks) and differences in specific human capital (female self-employed have less experience in running their business).