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Businesswomen in Germany and their performance by ethnicity: It pays to be self-employed

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  • Amelie F. Constant

Abstract

Purpose - The purpose of this paper is to study the determinants of wages and the labor market success of two kinds of entrepreneurial women in Germany: self-employed and salaried businesswomen, and investigate whether ethnicity is important in these challenging jobs. Design/methodology/approach - Using Lee's technique, the paper first estimates the probabilities of being in self-employment, a salaried businesswoman, working in other non-entrepreneurial jobs, and not working at all with a multinomial logit, and accordingly adjust the wage regressions for selection and heteroscedasticity. By employing data from the German Socio-economic Panel one can differentiate among different types of self-employment and business entrepreneurship, control for human capital and labor market structures, and estimate wages for native and immigrant women aged 20 to 65. The subject scope includes literature on entrepreneurship, self-employment, gender-edge, and immigrant earnings assimilation. Findings - Self-employment offers businesswomen a lucrative avenue with higher monetary rewards, albeit for a shorter spell. If salaried businesswomen went into self-employment, they would receive considerably higher wages and for at least 30 years. However, if self-employed businesswomen went into salaried jobs, their wages would decline. This suggests that it is the self-employment sector that offers better opportunities and monetary success, but not many businesswomen go into it. In these two entrepreneurial outlets human capital, years-since-migration and ethnicity are not significant. Research limitations/implications - Future research should overcome the cross-sectional limitation and take advantage of the panel aspect. Practical implications - Many qualified, highly educated and talented women are not part of the labor market and the entrepreneurial world. Germany should encourage these women to work, as it needs skilled workers and a stronger entrepreneurial sector. Financial disparities still exist between West and East Germany. Originality/value - The novelty comes from asserting that the entrepreneurial spirit can also exist in salaried jobs. The added value is the new empirical evidence on the importance of self-employment in Germany, where women fare well and success does not depend on ethnicity.

Suggested Citation

  • Amelie F. Constant, 2009. "Businesswomen in Germany and their performance by ethnicity: It pays to be self-employed," International Journal of Manpower, Emerald Group Publishing, vol. 30(1/2), pages 145-162, March.
  • Handle: RePEc:eme:ijmpps:v:30:y:2009:i:1/2:p:145-162
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    References listed on IDEAS

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    1. Amelie Constant, 2006. "Female Proclivity to the World of Business," Kyklos, Wiley Blackwell, vol. 59(4), pages 465-480, November.
    2. Robert W. Fairlie & Bruce D. Meyer, 1996. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 757-793.
    3. Constant, Amelie F. & Shachmurove, Yochanan, 2003. "Entrepreneurial Ventures and Wage Differentials Between Germans and Immigrants," IZA Discussion Papers 879, Institute for the Study of Labor (IZA).
    4. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
    5. Magnus Lofstrom, 2002. "Labor market assimilation and the self-employment decision of immigrant entrepreneurs," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(1), pages 83-114.
    6. Taylor, Mark P, 2001. "Self-Employment and Windfall Gains in Britain: Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 68(272), pages 539-565, November.
    7. Yannis Georgellis & Howard Wall, 2005. "Gender differences in self-employment," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(3), pages 321-342.
    8. Amelie Constant & Klaus F. Zimmermann, 2004. "Self-Employment Dynamics across the Business Cycle: Migrants versus Natives," Discussion Papers of DIW Berlin 455, DIW Berlin, German Institute for Economic Research.
    9. Amelie Constant & Klaus Zimmermann, 2006. "The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?," Small Business Economics, Springer, vol. 26(3), pages 279-300, April.
    10. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-512, March.
    11. David Blanchflower & A Oswald, 1993. "Entrepreneurship," CEP Discussion Papers dp0134, Centre for Economic Performance, LSE.
    12. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
    13. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
    14. Henning Lohmann, 2001. "Self-employed or employee, full-time or part-time? Gender differences in the determinants and conditions for self-employment in Europe and the US," MZES Working Papers 38, MZES.
    15. 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.
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    Cited by:

    1. Karen Leppel, 2016. "The incidence of self-employment by sexual orientation," Small Business Economics, Springer, vol. 46(3), pages 347-363, March.
    2. Korpi, Martin & Hedberg, Charlotta & Pettersson, Katarina, 2013. "Immigrant Women and Entrepreneurship: A Study of the Health Care Sector in Sweden, 2002-2006," SULCIS Working Papers 2013:3, Stockholm University, Linnaeus Center for Integration Studies - SULCIS.
    3. 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).

    More about this item

    Keywords

    Women executives; Entrepreneurialism; Self employed workers; Immigrants; Pay; Germany;

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - 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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