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What Makes an Entrepreneur and Does It Pay?: Native Men, Turks, and Other Migrants in Germany

  • Amelie Constant
  • Yochanan Shachmurove
  • Klaus F. Zimmermann

This paper focuses on the entrepreneurial endeavors of immigrants and natives in Germany. We pay closer attention to Turks, since they are the largest immigrant group with a strong entrepreneurial tradition, and the self-employed Turks in Germany represent about 70% of all Turkish entrepreneurs in the European Union. We identify the characteristics of the self-employed individuals and understand their underlying drive into selfemployment. At the same time we investigate how immigrant entrepreneurs fare in the labor market compared to natives. Employing data from the German Socioeconomic Panel 2000 release we find that the probability of self-employment increases significantly with age for all groups albeit at a decreasing rate. Among immigrants, Turks are twice as likely to choose self-employment as any other immigrant group. The age-earnings profiles of self-employed German and immigrant men are concave and surprisingly similarly shaped. While for self-employed German men hours of work and Treiman prestige scale scores increase their earnings, for self-employed immigrant men it is the longevity of the business that makes a difference. Everything else equal, the earnings of self-employed Turks are no different from the earnings of the self-employed Greeks, Italians, Spaniards, ex- Yugoslavs, Polish or other East Europeans, including those immigrants who have become German citizens.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 386.

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Length: 33 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp386
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  1. 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.
  2. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers 1942, National Bureau of Economic Research, Inc.
  3. Magnus Lofstrom, 2002. "Labor market assimilation and the self-employment decision of immigrant entrepreneurs," Journal of Population Economics, Springer, vol. 15(1), pages 83-114.
  4. 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 539-65, November.
  5. Borooah, Vani K & Hart, Mark, 1999. " Factors Affecting Self-Employment among Indian and Black Caribbean Men in Britain," Small Business Economics, Springer, vol. 13(2), pages 111-29, September.
  6. repec:iza:izadps:dp624 is not listed on IDEAS
  7. 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.
  8. Pfeiffer, Friedhelm & Reize, Frank, 1998. "Business Start-ups by the Unemployed - an Econometric Analysis Based on Firm Data," ZEW Discussion Papers 98-38, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Le, Anh T, 1999. " Empirical Studies of Self-Employment," Journal of Economic Surveys, Wiley Blackwell, vol. 13(4), pages 381-416, September.
  10. Tikva Lecker & Yochanan Shachmurove, 1999. "Immigration and socioeconomic gaps: theory and applications," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 539-549.
  11. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  12. Andrew M. Yuengert, 1995. "Testing Hypotheses of Immigrant Self-Employment," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 194-204.
  13. 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.
  14. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
  15. 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.
  16. 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.
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