Testosterone is associated with self-employment among Australian men

Testosterone has pronounced effects on men's physiological development and smaller, more nuanced, impacts on their economic behavior. In this study of 1199 Australian adult males, we investigate the relationship between the self-employed and their serum testosterone levels. Because prior studies have identified that testosterone is a hormone that is responsive to external factors (e.g. competition, risk-taking), we explicitly control for omitted variable bias and reverse causality by using an instrumental variable approach. We use insulin as our primary instrument to account for endogeneity between testosterone and self-employment. This is because prior research has identified a relationship between insulin and testosterone but not between insulin and self-employment. Our results show that there is a positive association between total testosterone and self-employment. Robustness checks using bioavailable testosterone and another similar instrument (daily alcohol consumption) confirm this positive finding.

► We examine if testosterone is associated with self-employment. ► We explicitly control for omitted variable bias by using an instrumental variable approach. ► Our results show that there is a positive association between testosterone and self-employment. ► We find that an increase in total testosterone by a standard deviation increases the probability of self-employment by 10%. ► We find a standard deviation of bioavailable testosterone increases the likelihood of self-employment among labor market active males by 12%.