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Self-Employment - a Way to End Unemployment?: Empirical Evidence from German Pseudo-Panel Data

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  • Daniela Glocker
  • Viktor Steiner

Abstract

This paper contributes to the policy-relevant question whether self-employment is a way out of (long-term) unemployment. We estimate the relationship between the entry rate into self-employment and previous (long-term) unemployment on the basis of pseudo-panel data for Germany in the period 1996-2002. The estimation method accounts for cohort fixed effects and measurement errors induced by the pseudo panel structure. We find that previous (long-term) unemployment significantly increases entry rates into self-employment for both men and women. These effects are quantitatively important, both in absolute terms and compared to other potential determinants of self-employment transitions, such as age, the level of vocational qualification and certain household characteristics.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.55706.de/dp661.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 661.

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Length: 24 p.
Date of creation: 2007
Date of revision:
Handle: RePEc:diw:diwwpp:dp661

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Keywords: self-employment; entrepreneurship; entry rate; start-ups; unemployment; pseudo-panel; age and cohort effects;

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References

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  1. Amelie Constant & Klaus Zimmermann, 2006. "The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?," Small Business Economics, Springer, Springer, vol. 26(3), pages 279-300, 04.
  2. Holtz-Eakin Douglas & Rosen Harvey S, 2005. "Cash Constraints and Business Start-Ups: Deutschmarks Versus Dollars," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-28, February.
  3. Boockmann, Bernhard & Steiner, Viktor, 2000. "Cohort effects and the returns to education in West Germany," ZEW Discussion Papers 00-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, Elsevier, vol. 30(1-2), pages 109-126.
  5. Friedhelm PFEIFFER & Winfried POHLMEIER, 1992. "Income, Uncertainty and the Probability of Self-Employment," Discussion Papers (REL - Recherches Economiques de Louvain) 1992032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  6. A. Roy Thurik & Martin A. Carree & Andre van Stel & David B. Audretsch, 2007. "Does Self-Employment reduce Unemployment?," Jena Economic Research Papers 2007-089, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  7. Parker,Simon C., 2004. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521828130.
  8. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  9. Cressy, Robert, 2000. "Credit rationing or entrepreneurial risk aversion? An alternative explanation for the Evans and Jovanovic finding," Economics Letters, Elsevier, Elsevier, vol. 66(2), pages 235-240, February.
  10. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2009. "Risk attitudes of nascent entrepreneurs–new evidence from an experimentally validated survey," Small Business Economics, Springer, Springer, vol. 32(2), pages 153-167, February.
  11. Baumgartner, Hans J. & Caliendo, Marco, 2007. "Turning Unemployment into Self-Employment: Effectiveness and Efficiency of Two Start-Up Programmes," IZA Discussion Papers 2660, Institute for the Study of Labor (IZA).
  12. Pfeiffer, Friedhelm & Reize, Frank, 1998. "Business Start-ups by the Unemployed - an Econometric Analysis Based on Firm Data," ZEW Discussion Papers 98-38, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  13. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(4), pages 719-48, August.
  14. Fossen, Frank M. & Steiner, Viktor, 2006. "Income Taxes and Entrepreneurial Choice: Empirical Evidence from Germany," IZA Discussion Papers 2164, Institute for the Study of Labor (IZA).
  15. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(4), pages 808-27, August.
  16. Carrasco, R., 1997. "Transitions to and from Self-Employment in Spain: An Empirical Analysis," Papers, Centro de Estudios Monetarios Y Financieros- 9710, Centro de Estudios Monetarios Y Financieros-.
  17. Martinez-Granado, Maite, 2002. "Self-Employment and Labour Market Transitions: A Multiple State Model," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3661, C.E.P.R. Discussion Papers.
  18. 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.
  19. Foti, Alessandro & Vivarelli, Marco, 1994. " An Econometric Test of the Self-Employment Model: The Case of Italy," Small Business Economics, Springer, Springer, vol. 6(2), pages 81-93, April.
  20. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 519-35, June.
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Citations

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Cited by:
  1. Block, Joern & Kohn, Karsten, 2011. "Sozialpolitische Ziele der Gründungsförderung am Beispiel von Gründungen aus der Arbeitslosigkeit
    [Social policy as a motivation for start-up subsidies: supporting start-ups out of unemployment]
    ," MPRA Paper 30775, University Library of Munich, Germany.
  2. Milo Bianchi, 2008. "Financial development, entrepreneurship and job satisfaction," PSE Working Papers halshs-00586059, HAL.
  3. Tansel, Aysit & Tasci, H. Mehmet, 2010. "Hazard Analysis of Unemployment Duration by Gender in a Developing Country: The Case of Turkey," IZA Discussion Papers 4844, Institute for the Study of Labor (IZA).
  4. Giuliano Guerra & Roberto Patuelli & Rico Maggi, 2010. "Ethnic Concentration, Cultural Identity and Immigrant Self-Employment in Switzerland," Quaderni della facoltà di Scienze economiche dell'Università di Lugano, USI Università della Svizzera italiana 1008, USI Università della Svizzera italiana.
  5. Kathrin Goeggel & Johannes Graeb & Friedhelm Pfeiffer, 2007. "Selbständigkeit in Europa 1991-2003: Empirische Evidenz mit Länderdaten," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(2), pages 153-167, April.
  6. Michaelides, Marios & Benus, Jacob, 2010. "Are self-employment training programs effective? Evidence from Project GATE," MPRA Paper 20883, University Library of Munich, Germany.
  7. Michaelides, Marios, 2010. "Race and self-employment: The role of training programs, self-employment background, and access to financing," MPRA Paper 20884, University Library of Munich, Germany.
  8. repec:ese:iserwp:2011-26 is not listed on IDEAS

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