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Do entrepreneurs really earn less?

Author

Listed:
  • Alina Sorgner

    (Friedrich Schiller University Jena
    Kiel Institute for the World Economy)

  • Michael Fritsch

    (Friedrich Schiller University Jena
    German Institute for Economic Research (DIW Berlin))

  • Alexander Kritikos

    (German Institute for Economic Research (DIW Berlin)
    University of Potsdam
    IZA
    IAB)

Abstract

Based on large representative German household survey data, we compare incomes of the self-employed with those of paid employees. We find that the entrepreneurial income gap is largest for those holding a tertiary degree, but in two directions: positive for employers (self-employed with further employees) and negative for solo entrepreneurs. Entrepreneurs holding a tertiary degree also face the greatest income variation. However, some solo self-employed earn more than their employed counterparts, in particular those with a university entrance degree as the highest level of education.

Suggested Citation

  • Alina Sorgner & Michael Fritsch & Alexander Kritikos, 2017. "Do entrepreneurs really earn less?," Small Business Economics, Springer, vol. 49(2), pages 251-272, August.
    • Handle: RePEc:kap:sbusec:v:49:y:2017:i:2:d:10.1007_s11187-017-9874-6
    DOI: 10.1007/s11187-017-9874-6
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    More about this item

    Keywords

    Income; Entrepreneurship; Self-employment; Germany;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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