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What Makes an Entrepreneur and Does It Pay?: Native Men, Turks, and Other Migrants in Germany

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  • Amelie Constant
  • Yochanan Shachmurove
  • Klaus F. Zimmermann

Abstract

This paper focuses on the entrepreneurial endeavors of immigrants and natives in Germany. We pay closer attention to Turks, since they are the largest immigrant group with a strong entrepreneurial tradition, and the self-employed Turks in Germany represent about 70% of all Turkish entrepreneurs in the European Union. We identify the characteristics of the self-employed individuals and understand their underlying drive into selfemployment. At the same time we investigate how immigrant entrepreneurs fare in the labor market compared to natives. Employing data from the German Socioeconomic Panel 2000 release we find that the probability of self-employment increases significantly with age for all groups albeit at a decreasing rate. Among immigrants, Turks are twice as likely to choose self-employment as any other immigrant group. The age-earnings profiles of self-employed German and immigrant men are concave and surprisingly similarly shaped. While for self-employed German men hours of work and Treiman prestige scale scores increase their earnings, for self-employed immigrant men it is the longevity of the business that makes a difference. Everything else equal, the earnings of self-employed Turks are no different from the earnings of the self-employed Greeks, Italians, Spaniards, ex- Yugoslavs, Polish or other East Europeans, including those immigrants who have become German citizens.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.41043.de/dp386.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 386.

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Length: 33 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp386

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Keywords: Entrepreneurship; self-employment; occupational choice; immigrants; wage differentials;

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References

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  1. Magnus Lofstrom, 2002. "Labor market assimilation and the self-employment decision of immigrant entrepreneurs," Journal of Population Economics, Springer, vol. 15(1), pages 83-114.
  2. Taylor, Mark P, 1999. "Self-Employment and Windfall Gains in Britain: Evidence From Panel Data," CEPR Discussion Papers 2084, C.E.P.R. Discussion Papers.
  3. 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.
  4. 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.
  5. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
  6. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-35, June.
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  8. Pfeiffer, Friedhelm & Reize, Frank, 2000. "Business start-ups by the unemployed -- an econometric analysis based on firm data," Labour Economics, Elsevier, vol. 7(5), pages 629-663, September.
  9. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  10. Taylor, Mark P, 1996. "Earnings, Independence or Unemployment: Why Become Self-Employed?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 253-66, May.
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  12. Fairlie, Robert, 2014. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Santa Cruz Department of Economics, Working Paper Series qt24p7v6gc, Department of Economics, UC Santa Cruz.
  13. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
  14. Andrew M. Yuengert, 1995. "Testing Hypotheses of Immigrant Self-Employment," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 194-204.
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  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.
  17. Tikva Lecker & Yochanan Shachmurove, 1999. "Immigration and socioeconomic gaps: theory and applications," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 539-549.
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Citations

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Cited by:
  1. Simonetta Longhi & Peter Nijkamp & Jacques Poot, 2009. "Regional Economic Impacts of Immigration: A Review," Tinbergen Institute Discussion Papers 09-047/3, Tinbergen Institute, revised 23 Jul 2009.
  2. Constant, Amelie F. & Zimmermann, Klaus F., 2004. "Self-Employment Dynamics Across the Business Cycle: Migrants Versus Natives," IZA Discussion Papers 1386, Institute for the Study of Labor (IZA).
  3. Yochanan Shachmurove, 2007. "Geography and Industry Meets Venture Capital," PIER Working Paper Archive 07-015, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  4. Yochanan Shachmurove, 2006. "An Excursion into the Venture Capital Industry Stratified by Locations and Industries 1996-2005," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 11(3), pages 79-104, Fall.
  5. Constant, Amelie F. & Tien, Bienvenue N., 2011. "Report No. 41: Germany's Immigration Policy and Labor Shortages," IZA Research Reports 41, Institute for the Study of Labor (IZA).
  6. S. Longhi & P. Nijkamp & J. Poot, 2010. "Joint impacts of immigration on wages and employment: review and meta-analysis," Journal of Geographical Systems, Springer, vol. 12(4), pages 355-387, December.
  7. Elisabeth Mueller, 2014. "Entrepreneurs from low-skilled immigrant groups in knowledge-intensive industries: company characteristics, survival and innovative performance," Small Business Economics, Springer, vol. 42(4), pages 871-889, April.
  8. Yochanan Shachmurove, 2009. "Economic Geography, Venture Capital and Focal Points of Entrepreneurial Activity," PIER Working Paper Archive 09-032, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  9. Joachim Ragnitz & Stefan Eichler & Beate Grundig & Harald Lehmann & Carsten Pohl & Lutz Schneider & Helmut Seitz & Marcel Thum, 2007. "Die demographische Entwicklung in Ostdeutschland : Gutachten im Auftrag des Bundesministeriums für Wirtschaft und Technologie," ifo Dresden Studien, Ifo Institute for Economic Research at the University of Munich, number 41.
  10. Y Georgellis & J G Sessions & N Tsitsianis, 2005. "Self-Employment Longitudinal Dynamics: A Review of the Literature," Economic Issues Journal Articles, Economic Issues, vol. 10(2), pages 51-84, September.
  11. Constant, Amelie F., 2004. "Immigrant versus Native Businesswomen: Proclivity and Performance," IZA Discussion Papers 1234, Institute for the Study of Labor (IZA).

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