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Self-Employment - a Way to End Unemployment?: Empirical Evidence from German Pseudo-Panel Data

  • Daniela Glocker
  • Viktor Steiner

This paper contributes to the policy-relevant question whether self-employment is a way out of (long-term) unemployment. We estimate the relationship between the entry rate into self-employment and previous (long-term) unemployment on the basis of pseudo-panel data for Germany in the period 1996-2002. The estimation method accounts for cohort fixed effects and measurement errors induced by the pseudo panel structure. We find that previous (long-term) unemployment significantly increases entry rates into self-employment for both men and women. These effects are quantitatively important, both in absolute terms and compared to other potential determinants of self-employment transitions, such as age, the level of vocational qualification and certain household characteristics.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.55706.de/dp661.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 661.

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Length: 24 p.
Date of creation: 2007
Date of revision:
Handle: RePEc:diw:diwwpp:dp661
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  1. Frank M. Fossen & Viktor Steiner, 2006. "Income Taxes and Entrepreneurial Choice: Empirical Evidence from Germany," Discussion Papers of DIW Berlin 582, DIW Berlin, German Institute for Economic Research.
  2. Boockmann, Bernhard & Steiner, Viktor, 2000. "Cohort effects and the returns to education in West Germany," ZEW Discussion Papers 00-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. A. Roy Thurik & Martin A. Carree & Andre van Stel & David B. Audretsch, 2007. "Does Self-Employment reduce Unemployment?," Jena Economic Research Papers 2007-089, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  4. 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.
  5. 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.
  6. Marco Caliendo & Frank M. Fossen & Alexander S. Kritikos, 2006. "Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally-Validated Survey," Discussion Papers of DIW Berlin 600, DIW Berlin, German Institute for Economic Research.
  7. 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.
  8. Douglas Holtz-Eakin & Harvey Rosen, 1999. "Cash Constraints and Business Start-ups: Deutschmarks versus Dollars," Center for Policy Research Working Papers 11, Center for Policy Research, Maxwell School, Syracuse University.
  9. Carrasco, Raquel, 1999. " Transitions to and from Self-employment in Spain: An Empirical Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(3), pages 315-41, August.
  10. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
  11. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  12. 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).
  13. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
  14. Hans J. Baumgartner & Marco Caliendo, 2007. "Turning Unemployment into Self-Employment: Effectiveness and Efficiency of Two Start-Up Programmes," Discussion Papers of DIW Berlin 671, DIW Berlin, German Institute for Economic Research.
  15. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
  16. Foti, Alessandro & Vivarelli, Marco, 1994. " An Econometric Test of the Self-Employment Model: The Case of Italy," Small Business Economics, Springer, vol. 6(2), pages 81-93, April.
  17. Friedhelm PFEIFFER & Winfried POHLMEIER, 1992. "Income, Uncertainty and the Probability of Self-Employment," Discussion Papers (REL - Recherches Economiques de Louvain) 1992032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  18. Hans J. Baumgartner & Marco Caliendo, 2008. "Turning Unemployment into Self-Employment: Effectiveness of Two Start-Up Programmes," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(3), pages 347-373, 06.
  19. Cressy, Robert, 2000. "Credit rationing or entrepreneurial risk aversion? An alternative explanation for the Evans and Jovanovic finding," Economics Letters, Elsevier, vol. 66(2), pages 235-240, February.
  20. Martinez-Granado, Maite, 2002. "Self-Employment and Labour Market Transitions: A Multiple State Model," CEPR Discussion Papers 3661, C.E.P.R. Discussion Papers.
  21. repec:cup:cbooks:9780521828130 is not listed on IDEAS
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