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Who Starts a Business and who is Self-Employed in Germany

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  • Michael Fritsch

    ()
    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Alexander Kritikos

    ()
    (German Institute for Economic Research (DIW Berlin), University of Potsdam, IZA Bonn, and o IAB, Nuremberg)

  • Alina Rusakova

    ()
    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

Abstract

Based on representative data, the German Micro-Census, we provide an overview of the development of self-employment and entrepreneurship in Germany between 1991 and 2011, the first two decades after reunification. We investigate the socio-economic background of these individuals, their education, previous employment status, and their income level. We observe a unique increase in self-employment in Germany by 40 percent which can partly be attributed to the transformation process of East Germany and to the shift to the service sector. We notice a yearly start-up rate of 1 percent among the working population (almost 20 percent of them being re-starters), a decision that pays for the majority of individuals in terms of income. Contrary to other countries, in Germany there is a positive relationship between educational levels and the probability of starting a business.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2012-001.

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Date of creation: 23 Jan 2012
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Handle: RePEc:jrp:jrpwrp:2012-001

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Keywords: Entrepreneurship; Self-Employment; Start-ups; Germany;

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References

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  1. David Audretsch, 2009. "The entrepreneurial society," The Journal of Technology Transfer, Springer, vol. 34(3), pages 245-254, June.
  2. May-Strobl, Eva & Pahnke, André & Schneck, Stefan & Wolter, Hans-Jürgen, 2011. "Selbstständige in der Grundsicherung," Working Papers 02/11, Institut für Mittelstandsforschung (IfM) Bonn.
  3. Caliendo, Marco & Fossen, Frank M. & Kritikos, Alexander S., 2006. "Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally Validated Survey," Discussion Papers 252, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
  4. Poschke, Markus, 2008. "Who Becomes an Entrepreneur? Labor Market Prospects and Occupational Choice," IZA Discussion Papers 3816, Institute for the Study of Labor (IZA).
  5. Marco Caliendo & Alexander S. Kritikos, 2008. "Start-Ups by the Unemployed: Characteristics, Survival and Direct Employment Effects," Working Papers 008, Hanseatic University, Germany, Department of Economics.
  6. Caliendo, Marco & Künn, Steffen, 2010. "Start-Up Subsidies for the Unemployed: Long-Term Evidence and Effect Heterogeneity," IZA Discussion Papers 4790, Institute for the Study of Labor (IZA).
  7. Simon C. Parker & Yacine Belghitar, 2006. "What Happens to Nascent Entrepreneurs? An Econometric Analysis of the PSED," Small Business Economics, Springer, vol. 27(1), pages 81-101, August.
  8. Caliendo, Marco & Kritikos, Alexander S., 2007. "Die reformierte Gründungsförderung für Arbeitslose: Chancen und Risiken," IZA Discussion Papers 3114, Institute for the Study of Labor (IZA).
  9. 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.
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  11. David B. Audretsch, 2007. "From small business promotion to creating an entrepreneurial society," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 8(2), pages 3-6, 07.
  12. Michael Fritsch, 2011. "The effect of new business formation on regional development - Empirical evidence, interpretation, and avenues for further research," Jena Economic Research Papers 2011-006, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  13. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521728355.
  14. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
  15. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
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Citations

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Cited by:
  1. Alina Sorgner & Michael Fritsch, 2013. "Occupational Choice and Self-Employment: Are They Related?," SOEPpapers on Multidisciplinary Panel Data Research 533, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Alina Sorgner, 2012. "A Physician With A Soul Of A Cook? Entrepreneurial Personality Across Occupations," Jena Economic Research Papers 2012-063, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  3. Sorgner, Alina & Fritsch, Michael, 2013. "Stepping Forward: Personality Traits, Choice of Profession, and the Decision to Become Self-Employed," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79768, Verein für Socialpolitik / German Economic Association.
  4. Michael Fritsch & Elisabeth Bublitz & Alina Rusakova & Michael Wyrwich, 2012. "How Much of a Socialist Legacy? The Reemergence of Entrepreneurship in the East German Transformation to a Market Economy," Jena Economic Research Papers 2012-042, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  5. Michael Fritsch & Alina Rusakova, 2012. "Self-Employment after Socialism: Intergenerational Links, Entrepreneurial Values, and Human Capital," Jena Economic Research Papers 2012-022, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  6. Michael Fritsch & Alina Sorgner, 2013. "Entrepreneurship and Creative Professions: A Micro-Level Analysis," SOEPpapers on Multidisciplinary Panel Data Research 538, DIW Berlin, The German Socio-Economic Panel (SOEP).
  7. Kay, Rosemarie & Schneck, Stefan, 2012. "Hemmnisse und Probleme bei Gründungen durch Migranten," IfM-Materialien 214, Institut für Mittelstandsforschung (IfM) Bonn.
  8. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper 48403, University Library of Munich, Germany.
  9. Fritsch, Michael & Kritikos, Alexander S. & Pijnenburg, Katharina, 2013. "Business Cycles, Unemployment and Entrepreneurial Entry: Evidence from Germany," IZA Discussion Papers 7852, Institute for the Study of Labor (IZA).
  10. Pahnke, André & May-Strobl, Eva & Schneck, Stefan, 2014. "Die Einkommenssituation von Selbstständigen und die Inanspruchnahme staatlicher Leistungen auf Basis des SGB II," IfM-Materialien 226, Institut für Mittelstandsforschung (IfM) Bonn.
  11. Michael Fritsch & Michael Wyrwich, 2012. "The Long Persistence of Regional Entrepreneurship Culture: Germany 1925–2005," Papers in Evolutionary Economic Geography (PEEG) 1214, Utrecht University, Section of Economic Geography, revised Jul 2012.
  12. Anne-Kristin Kuhnt & Heike Trappe, 2013. "Easier said than done: childbearing intentions and their realization in a short term perspective," MPIDR Working Papers WP-2013-018, Max Planck Institute for Demographic Research, Rostock, Germany.
  13. Caliendo, Marco & Künn, Steffen & Wießner, Frank, 2012. "Report No. 48: Der Gründungszuschuss in Brandenburg: Eine regionale Analyse," IZA Research Reports 48, Institute for the Study of Labor (IZA).
  14. Michael Fritsch & Alexander Kritikos & Alina Sorgner, 2013. "Drivers of Self-Employment - A Multivariate Decomposition Analysis for the Case of Germany," Jena Economic Research Papers 2013-006, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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