This paper investigates the factors that may affect the likelihood of obtaining employment in the selfemployment
sector within the urban areas of Pakistan. Self-employment is a major source of employment in much of the
developing world since salaried employment and wage work as an employment option is not readily available. This lack of
employment opportunities in the waged employment sector makes it incumbent upon policy makers to try and find ways of
absorbing the ever increasing labor force into viable employment elsewhere. The self-employment sector offers a promising
alternative in this regard. In order to boost employment in the self-employed sector, the present study set out to explore the
various factors that may have a bearing upon the likelihood of entry into this sector. The determinants focused upon were the
personal characteristics of the individual worker, such as age, marital status, gender, assets owned and educational status.
The study used primary data from Household Integrated Economic Survey (HIES) conducted by Pakistan Bureau of Statistics
in the year 2010-11 is used. The model used presents employment decision as binary choice between wage employment and
self-employment. Reduced form probit equation is used to model the effects of personal and regional characteristics on this
decision. Gender, marital status, and age were all seen to impact the self-employment. In general being married, being male,
and being older all led to a higher probability of self-employment. Education is another important variable. Household size
(easy availability of labour) and assets (proxy for capital) were significant in only some of the regions.