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The comparison of incomes of self-employed and salaried workers among German Nationals and immigrants

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  • Amelie Constant

    ()
    (The Institute for the Study of Labor (IZA), Bonn)

  • Yochanan Shachmurove

    ()
    (Departments of Economics, City College of The City University of New York and University of Pennsylvania)

Abstract

This paper attempts to compare the economic success of immigrants and natives in Germany. Employing data from German Socioeconomic Panel, the paper investigates the factors affecting self-employment as well as compares the income of self-employed and employed workers among four groups – West Germans, East Germans, guest workers and ethnic immigrants. Increasing age, higher education and self-employed parents increases probability of an individual’s self-employment, with the last two applying only to West Germans. The self-employed earn more than their salaried counterparts, except for East Germans. Despite self-employed immigrants having the highest earnings of all groups, self-employment rates remain low among immigrants.

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File URL: http://economics.sas.upenn.edu/system/files/working-papers/05-030.pdf
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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 05-030.

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Length: 42 pages
Date of creation: 01 Nov 2005
Date of revision:
Handle: RePEc:pen:papers:05-030

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Keywords: Entrepreneurship; self-employment; Occupational Choice; immigrants; Wage Differentials;

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References

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  1. 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).
  2. Bauer, Thomas & Zimmermann, Klaus F., 1997. "Unemployment and wages of ethnic Germans," The Quarterly Review of Economics and Finance, Elsevier, vol. 37(Supplemen), pages 361-377.
  3. 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.
  4. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
  5. 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.
  6. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
  7. 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.
  8. Alan B. Krueger & Jorn-Steffen Pischke, 1997. "Observations and Conjectures on the U.S. Employment Miracle," NBER Working Papers 6146, National Bureau of Economic Research, Inc.
  9. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
  10. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  11. 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.
  12. 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).
  13. David G. Blanchflower, 2004. "Self-Employment: More may not be better," NBER Working Papers 10286, National Bureau of Economic Research, Inc.
  14. Tikva Lecker & Yochanan Shachmurove, 1999. "Immigration and socioeconomic gaps: theory and applications," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 539-549.
  15. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
  16. Michael Hout & Harvey Rosen, 2000. "Self-Employment, Family Background, and Race," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 670-692.
  17. 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.
  18. repec:fth:prinin:390 is not listed on IDEAS
  19. Wolpin, Kenneth I, 1977. "Education and Screening," American Economic Review, American Economic Association, vol. 67(5), pages 949-58, December.
  20. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  21. Robert W. Fairlie & Bruce D. Meyer, 2000. "Trends in Self-Employment among White and Black Men during the Twentieth Century," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 643-669.
  22. 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.
  23. Constant, Amelie F. & Zimmermann, Klaus F., 2004. "The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?," IZA Discussion Papers 1440, Institute for the Study of Labor (IZA).
  24. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
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Cited by:
  1. Bruder, Jana & Räthke-Döppner, Solvig, 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.

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