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Does Student Debt Discourage Young Workers from Becoming Self-Employed?

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Working Paper Number 2020-15


Rising student debt balances have captured the attention of policy makers and academics; however, the effect of student debt on individuals’ self-employment behavior is still unclear. In this paper, we estimate the association between student debt and self-employment using data from the Survey of Income and Program Participation merged with administrative data on employment histories. Our results suggest that student debt is associated with lower levels of self-employment for men, with a particularly pronounced effect on men becoming primarily self-employed. In contrast, women with substantial amounts of student debt are no more or less likely to become self-employed than are women with no student debt. These findings suggest that student debt may be part of the explanation for lower self-employment rates among younger adults, and they provide additional evidence that on average male and female self-employment behavior remain distinct.


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