This article examines the relationship between unemployment and selfemployment. The empirical work is framed by a job search model with learning, where self-employment is an alternative for jobless workers. Consistent with the model's prediction, we find that for both spain and the United States, duration of unemployment significantly increases the probability of becoming self-employed. Further analysis showed that part-time work and the absence of Social Security coverage are more likely to be aseociated with self-employed workers. We also find that, in Spain, those self-employed who do not hire any persone earn eignificantly less than other comparable worker
