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Necessity and Opportunity Entrepreneurs and Their Duration in Self-employment: Evidence from German Micro Data

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  • Jörn Block
  • Philipp Sandner

Abstract

Using data from the German Socio-Economic Panel Study (GSOEP), we analyze whether necessity entrepreneurs differ from opportunity entrepreneurs in terms of self-employment duration. Using univariate statistics, we find that opportunity entrepreneurs remain in self-employment longer than necessity entrepreneurs. However, after controlling for the entrepreneurs' education in the professional area where they start their venture, this effect is no longer significant. We therefore conclude that the difference observed is not an original effect but rather is due to selection. We then go on to discuss the implications of our findings for entrepreneurship-policy making, and give suggestions to improve governmental start-up programs.

Suggested Citation

  • Jörn Block & Philipp Sandner, 2009. "Necessity and Opportunity Entrepreneurs and Their Duration in Self-employment: Evidence from German Micro Data," SOEPpapers on Multidisciplinary Panel Data Research 191, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp191
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    Keywords

    Self-employment; Firm survival; Necessity entrepreneurs; Opportunity entrepreneurs; Hazard rates; GSOEP;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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