Why the Gap? Determinants of Self-Employment Earnings Differentials for Male and Female Millennials in the US

We investigated gender differences in self-employment earnings for US Millennials, and whether differences could be attributed to individual characteristics, business characteristics, or factors related to household formation, such as marriage and parenthood. Using a nationally representative dataset of US youth, we found significant earnings differences favoring men and suggestive evidence of a "motherhood earnings penalty'' (Budig and England 2001, p. 204-225). After controlling for business characteristics, however, the effect of gender itself was not statistically significant and the effect of motherhood only approached statistical significance, suggesting that gendered choices and paths explain earnings differences, not gender or motherhood per se. Future work would benefit from a larger dataset and should explore the role of work location and education in earnings.