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Why Did Self-Employment Increase so Strongly in Germany?

Author

Listed:
  • Michael Fritsch
  • Alexander S. Kritikos
  • Alina Sorgner

Abstract

Germany experienced a unique rise in the level of self-employment in the first two decades following unification. Applying the non-linear Blinder-Oaxaca decomposition technique, we find that the main factors driving these changes in the overall level of self-employment are demographic developments, the shift towards service sector employment, and a larger share of population holding a tertiary degree. While these factors explain most of the development in self-employment with employees and the overall level of self-employment in West Germany, their explanatory power is much lower for the stronger increase of solo self-employment and of self-employment in former socialist East Germany.

Suggested Citation

  • Michael Fritsch & Alexander S. Kritikos & Alina Sorgner, 2015. "Why Did Self-Employment Increase so Strongly in Germany?," Discussion Papers of DIW Berlin 1447, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1447
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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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