Spells of self-employment for younger men are typically of short duration with slightly more than half lasting two years or less. This article examines factors that lead to longer durations, focusing on the role of cyclical factors in distinguishing entrepreneurs from discouraged wage workers.

Employment growth is highly correlated across regions. The author uses joint movements in regional employment growth to define and estimate a common factor, analogues to the business cycle. Regions differ substantially in the relative importance of cyclical shocks and idiosyncratic shocks in...