Is Self-Employment a Career Trap? A Large-Scale Field Experiment in the Labor Market

We conduct a large-scale labor-market experiment using more than 8,000 fictitious résumés to uncover the demand-side mechanisms behind the adverse treatment of the self-employed entering wage employment. We find that, compared to wage earners, self-employed individuals face lower callback rates across industries and skill groups. This adverse treatment is concentrated in the lower-skilled, non-managerial market of associate professionals, with a 28% drop in callback. Results suggest that self-employment leads to the development of generalist skills (useful for managerial roles) at the cost of specialist skills. Furthermore, perceived behavioral fit of the self-employed seems to be penalized in associate positions.