“Motherhood, Self-Employment, and the Cost of Flexibility”
Job Market Paper
Women, especially mothers, have a demand for temporal flexibility in work arrangements. Findings in developed-country contexts indicate that penalties associated with flexibility are higher in self-employment than in wage employment, yet this may not be true in a developing country. Using Indonesian household data, I ask whether the cost of working hours and the temporal flexibility varies between wage employment and self-employment. Using a multi-sector choice model which allows for job-specific sources of observed and unobserved heterogeneity in women's preferences, I find all women are willing to give up a portion of their wage rate to work fewer hours and have more flexible hours. However, the cost to women of fewer hours and greater flexibility varies by whether a woman is self-employed or wage employed and whether she has children. All self-employed women and wage-working mothers are willing to give up more than 10% of their wages for a 10% increase in flexibility but the trade-off is steeper for mothers in wage employment than in self-employment. In particular, self-employed mothers will give up one-third of their wage rate to access the flexibility and hour equivalent to working one fewer day a week over a working year. These findings have implications for policies and programs designed to foster entrepreneurship in developing countries.