Self-employers vs employers

We are trying to identify EMPLOYERS and SELF-EMPLOYED in the data. The way we proceed is as follows: 1) there is a variable (“Classworker”) that says whether someone is a self-employed or not. If the answer is NO, then we claim that he/she is a worker. If they say YES, then we consider another variable called OCCUPATION. 2) If the value of OCCUPATION is “manager/official/proprietor” then we label this person as an EMPLOYER. If the value of that variable is NOT “manager/official/proprietor” then we label this person as a SELF-EMPLOYED. This seems to make sense: if someone says you are a self-employed and NOT a manager/official/proprietor it is strange to think that you have workers under you…

This seems to make sense but we are not 100% sure… However, upon reflection, it would be entirely possible for someone to list something else as their occupation even when they are an entrepreneur and have multiple employees. We have searched through other variables to see if there is any sort of indication to differentiate the two and can’t seem to find any that work perfectly. There is, as I said, occupation and industry, there is past employment, and there is personal and business income.

You can get this information since 2014 directly from the variables PAIDEMP1 and PAIDEMP2 (also PAIDEMP1N and PAIDEMP2N). If you need earlier data on this, you may want to examine the relationship between these variables and your proposed categorization to see how well it fits, or try to impute the value for earlier years. Otherwise, alternative sources of data on this exist in the Survey of Business Owners, the Annual Survey of Entrepreneurs, and the forthcoming Annual Business Survey, which will supersede both of those earlier surveys.