Drug Dealing and Legitimate Self‐Employment

Theoretical models of self‐employment posit that attitudes toward risk, entrepreneurial ability, and preferences for autonomy are central to the individual's decision between self‐employment and wage/salary work. I provide indirect evidence on this hypothesis by examining the relationship between drug dealing as a youth and legitimate self‐employment in later years using data from the National Longitudinal Survey of Youth. I find that drug dealers are 11%–21% more likely to choose self‐employment than non‐drug‐dealers, all else equal. After ruling out a few alternative explanations, I interpret these results as providing indirect evidence supporting the hypothesis.