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The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?

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Author Info

  • Amelie Constant

    ()

  • Klaus Zimmermann

    ()

Abstract

This paper uses a state of the art three-stage estimation technique to identify the determinants of the self-employed immigrant and native men in Germany. Their making is surprisingly alike. Employing data from the German Socioeconomic Panel 2000 (GSOEP) release we find that self-employment is not significantly affected by exposure to Germany or by human capital. But this choice has a very strong intergenerational link and it is also related to homeownership and financial worries. While individuals are strongly pulled into self-employment if it offers higher earnings, immigrants are additionally pushed into self-employment when they feel discriminated. Married immigrants are more likely to go into self-employment, but less likely when they have young children. Immigrants with foreign passports living in ethnic households are more likely self-employed than native Germans. The earnings of self-employed men increase with exposure to Germany, hours worked and occupational prestige; they decrease with high regional unemployment to vacancies ratios. Everything else equal, the earnings of self-employed Germans are not much different from the earnings of the self-employed immigrants, including those who have become German citizens. However, immigrants suffer a strong earnings penalty if they feel discriminated against while they receive a premium if they are German educated. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s11187-005-3004-6
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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 26 (2006)
Issue (Month): 3 (04)
Pages: 279-300

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Handle: RePEc:kap:sbusec:v:26:y:2006:i:3:p:279-300

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Web page: http://www.springerlink.com/link.asp?id=100338

Related research

Keywords: Entrepreneurship; immigrants; occupational choice; self-employment; wage differentials; J23; M13; J24; J61; J31;

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References

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  1. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
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  9. Borooah, Vani K & Hart, Mark, 1999. " Factors Affecting Self-Employment among Indian and Black Caribbean Men in Britain," Small Business Economics, Springer, vol. 13(2), pages 111-29, September.
  10. Andrew M. Yuengert, 1995. "Testing Hypotheses of Immigrant Self-Employment," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 194-204.
  11. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2003. "Entrepreneurship Selection and Performance," Tinbergen Institute Discussion Papers 03-046/3, Tinbergen Institute, revised 24 Sep 2004.
  12. Clark, Kenneth & Drinkwater, Stephen, 1998. "Ethnicity and Self-Employment in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(3), pages 383-407, August.
  13. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
  14. Robert W. Fairlie & Bruce D. Meyer, 1996. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 757-793.
  15. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  16. SOEP Group, 2001. "The German Socio-Economic Panel (GSOEP) after More than 15 Years: Overview," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 7-14.
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