Computerization and the Decline of Unincorporated Self-Employment

We investigate the effect of the computer adoption rate, referred to as computerization, on the proportion of unincorporated self-employed individuals within the US labor markets. The conceptual framework suggests that computerization may either augment or diminish this share. Employing a Bartik instrument approach, we disentangle the causal effect of computerization on unincorporated self-employment from 1990 to 2010. Our empirical findings indicate that a 1% increase in computerization corresponds to a 0.79% reduction in the share of unincorporated self-employed individuals. Notably, these estimates exhibit variations across industries and metropolitan areas.