WASHINGTON, D.C. – Educational level, prior military service, and household wealth are strong predictors of self-employment according to a working paper released today by the Office of Advocacy of the U.S. Small Business Administration. The paper finds that individuals with prior military experience are up to 11 percent more likely to be self-employed, while educational level can increase the likelihood of self-employment by as much as 8.3 percent.

“We often talk about the importance of education to our own personal fulfillment and to the economy as a whole,” said Dr. Chad Moutray the paper’s author and Chief Economist for the Office of Advocacy. “This study shows that educational attainment is also a strong predictor of self-employment, with additional years of college significantly increasing the chance of being one's own boss.” He added, “Homeownership - a measure of wealth - and veteran status are also vital.”

The paper, Educational Attainment and Other Characteristics of the Self-Employed: An Examination using Data from the Panel Study of Income Dynamics, analyzed data from the Panel Study of Income Dynamics (PSID) for 2003. The data set is unique as it tracks families (including adult children’s families) over time, beginning in 1968. The paper was released at “What Makes an Entrepreneur? Educational Attainment and Other Characteristics of the Self-Employed” seminar, sponsored by the Hudson Institute Center For Employment Policy

The paper finds, among other things, that:

· Having some college education increases the chances of self-employment by 3.3 percent, a baccalaureate degree by 4.4 percent and graduate experience by 8.3 percent.

· Prior military experience is the strongest predictor of self-employment, increasing the likelihood by 9.4 to 11 percent.

· Homeowners are 7 percent more likely to be self-employed, while every $100,000 increase in mortgage value increases the probability of self-employment by 2 percent.

For a copy of the paper, visit the Office of Advocacy web site at www.sba.gov/advo.

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers. For more information, visit www.sba.gov/advo, or call (202) 205-6533.