Abstract.  This paper deals with the transitions and alternation between self-employment, paid-employment and non-employment in Finland in 1987–1999, paying special attention to differences in self-employment dynamics between areas characterized by different labour market conditions, viz. rural and urban locations. Markovian analysis reveals significant differences by the type of area in the processes of transition between the three labour market states. Alternation between self-employment and other labour markets states turns out to be greater in rural than urban areas. Five major types of alternating working careers are identified. The type of area is importantly related to alternating working careers even when all the important variables describing personal and family characteristics are included in the models.