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

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Author Info
Constant, Amelie (IZA Bonn)
Zimmermann, Klaus F. () (IZA Bonn, University of Bonn and DIW Berlin)

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Abstract

This paper uses a state of the art three-stage technique to identify the characteristics of the self-employed immigrant and native men in Germany and to understand their underlying drive into self-employment. Employing data from the German Socioeconomic Panel 2000 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 selfemployment if it offers higher earnings, immigrants are additionally pushed into selfemployment when they feel discriminated. Married immigrants are more likely to go into selfemployment, but less likely when they have young children. Immigrants living with foreign passports 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.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1440.

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Length: 39 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1440

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Related research
Keywords: entrepreneurship; self-employment; occupational choice; immigrants; wage differentials;

Other versions of this item:

Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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.
  2. Basu, Anuradha, 1998. " An Exploration of Entrepreneurial Activity among Asian Small Businesses in Britain," Small Business Economics, Springer, vol. 10(4), pages 313-26, June. [Downloadable!] (restricted)
  3. 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. [Downloadable!] (restricted)
  4. 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. [Downloadable!]
  5. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers 1942, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May. [Downloadable!] (restricted)
  7. Le, Anh T, 1999. " Empirical Studies of Self-Employment," Journal of Economic Surveys, Blackwell Publishing, vol. 13(4), pages 381-416, September. [Downloadable!] (restricted)
  8. 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.
  9. Rees, Hedley & Shah, Anup, 1986. "An Empirical Analysis of Self-employment in the U.K," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 95-108, January. [Downloadable!] (restricted)
  10. Lofstrom, Magnus, 1999. "Labor Market Assimilation and the Self-Employment Decision of Immigrant Entrepreneurs," IZA Discussion Papers 54, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  11. Zimmermann, Klaus F, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring. [Downloadable!] (restricted)
  12. 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. [Downloadable!] (restricted)
  13. Simon C. Parker, 2003. "Does Tax Evasion Affect Occupational Choice?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(3), pages 379-394, 07. [Downloadable!] (restricted)
  14. 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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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Andrew Burke & Felix FitzRoy & Michael Nolan, 2008. "What makes a die-hard entrepreneur? Beyond the ‘employee or entrepreneur’ dichotomy," Small Business Economics, Springer, vol. 31(2), pages 93-115, August. [Downloadable!] (restricted)
    Other versions:
  2. Pernilla Andersson & Eskil Wadensjö, 2006. "Employees Who Become Self-Employed: Do Labour Income and Wages Have an Impact?," IZA Discussion Papers 1971, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Daniela Glocker & Viktor Steiner, 2007. "Self-Employment - a Way to End Unemployment?: Empirical Evidence from German Pseudo-Panel Data," Discussion Papers of DIW Berlin 661, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  4. Dorothea Schäfer & Oleksandr Talavera, 2006. "Small-Scale Business Survival and Inheritance: Evidence from Germany," Discussion Papers of DIW Berlin 636, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  5. Bonin, Holger & Constant, Amelie & Tatsiramos, Konstantinos & Zimmermann, Klaus F, 2006. "Native-Migrant Differences in Risk Attitudes," CEPR Discussion Papers 5587, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Dorothea Schäfer & Oleksandr Talavera, 2009. "Small business survival and inheritance: evidence from Germany," Small Business Economics, Springer, vol. 32(1), pages 95-109, January. [Downloadable!] (restricted)
  7. Danzer, Alexander M. & Ulku, Hulya, 2008. "Determinants of Integration and its Impact on the Economic Success of Immigrants: A Case Study of the Turkish Community in Berlin," IZA Discussion Papers 3762, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Constant, Amelie F., 2008. "Businesswomen in Germany and Their Performance by Ethnicity: It Pays to Be Self-Employed," IZA Discussion Papers 3644, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  9. Amelie Constant & Yochanan Shachmurove, 2005. "The comparison of incomes of self-employed and salaried workers among German Nationals and immigrants," PIER Working Paper Archive 05-030, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania. [Downloadable!]
  10. P. Mueller, 2006. "Entrepreneurship in the Region: Breeding Ground for Nascent Entrepreneurs?," Small Business Economics, Springer, vol. 27(1), pages 41-58, August. [Downloadable!] (restricted)
  11. Jana Bruder & Solvig Räthke-Döppner, 2008. "Ethnic Minority Self-Employment in Germany: Geographical Distribution and Determinants of Regional Variation," Thuenen-Series of Applied Economic Theory 100, University of Rostock, Institute of Economics, Germany. [Downloadable!]
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This page was last updated on 2009-11-23.

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