IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp2561.html
   My bibliography  Save this paper

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

Author

Listed:
  • Glocker, Daniela

    (CEP, London School of Economics)

  • Steiner, Viktor

    (Free University of Berlin)

Abstract

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.

Suggested Citation

  • Glocker, Daniela & Steiner, Viktor, 2007. "Self-Employment: A Way to End Unemployment? Empirical Evidence from German Pseudo-Panel Data," IZA Discussion Papers 2561, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2561
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp2561.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Martínez-Granado, Maite, 1998. "Self-employment and labour market transitions: a multiple state model," UC3M Working papers. Economics 4159, Universidad Carlos III de Madrid. Departamento de Economía.
    2. Fossen, Frank M. & Steiner, Viktor, 2006. "Income Taxes and Entrepreneurial Choice: Empirical Evidence from Germany," IZA Discussion Papers 2164, Institute of Labor Economics (IZA).
    3. Thurik, A. Roy & Carree, Martin A. & van Stel, André & Audretsch, David B., 2008. "Does self-employment reduce unemployment?," Journal of Business Venturing, Elsevier, vol. 23(6), pages 673-686, November.
    4. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    5. 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.
    6. 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, June.
    7. Holtz-Eakin Douglas & Rosen Harvey S, 2005. "Cash Constraints and Business Start-Ups: Deutschmarks Versus Dollars," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-26, February.
    8. repec:bla:obuest:v:61:y:1999:i:3:p:315-41 is not listed on IDEAS
    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. Raquel Carrasco, 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 315-341, August.
    11. 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.
    12. 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 253-266, May.
    13. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2009. "Risk attitudes of nascent entrepreneurs–new evidence from an experimentally validated survey," Small Business Economics, Springer, vol. 32(2), pages 153-167, February.
    14. Lancaster,Tony, 1992. "The Econometric Analysis of Transition Data," Cambridge Books, Cambridge University Press, number 9780521437899, October.
    15. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    16. Parker,Simon C., 2006. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521030632, October.
    17. Pfeiffer, Friedhelm & Reize, Frank, 2000. "Business start-ups by the unemployed -- an econometric analysis based on firm data," Labour Economics, Elsevier, vol. 7(5), pages 629-663, September.
    18. 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 808-827, August.
    19. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    20. 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 719-748, August.
    21. 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).
    22. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    23. Bernhard Boockmann & Viktor Steiner, 2006. "Cohort effects and the returns to education in West Germany," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1135-1152.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Milo Bianchi, 2012. "Financial Development, Entrepreneurship, and Job Satisfaction," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 273-286, February.
    2. Göggel Kathrin & Gräb Johannes & Pfeiffer Friedhelm, 2007. "Selbständigkeit in Europa 1991–2003: Empirische Evidenz mit Länderdaten / Self-Employment in 15 European Countries 1991–2003," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(2), pages 153-167, April.
    3. Giuliano Guerra & Roberto Patuelli & Rico Maggi, 2012. "Ethnic concentration, cultural identity and immigrant self-employment in Switzerland," Chapters, in: Peter Nijkamp & Jacques Poot & Mediha Sahin (ed.), Migration Impact Assessment, chapter 4, pages 147-171, Edward Elgar Publishing.
    4. Cynthia Sin Tian Ho & Björn Berggren, 2020. "The effect of bank branch closures on new firm formation: the Swedish case," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(2), pages 319-350, October.
    5. George Saridakis & Anne-Marie Mohammed & Jesús M. García-Iglesias & Rebeca I. Muñoz Torres, 2018. "Economy and Divorces: Their Impact Over Time on the Self-Employment Rates in Spain," Journal of Family and Economic Issues, Springer, vol. 39(3), pages 422-435, September.
    6. Aysit Tansel & H. Mehmet Taşçı, 2010. "Hazard Analysis of Unemployment Duration by Gender in a Developing Country: The Case of Turkey," LABOUR, CEIS, vol. 24(4), pages 501-530, December.
    7. Halicioglu, Ferda & Yolac, Sema, 2015. "Testing the impact of unemployment on self-employment: empirical evidence from OECD countries," MPRA Paper 65026, University Library of Munich, Germany.
    8. repec:dau:papers:123456789/5067 is not listed on IDEAS
    9. Michaelides, Marios, 2010. "Race and self-employment: The role of training programs, self-employment background, and access to financing," MPRA Paper 20884, University Library of Munich, Germany.
    10. Michaelides Marios & Davis Scott, 2020. "From unemployment to self-employment: The role of entrepreneurship training," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-35, March.
    11. P. Taylor, Mark, 2011. "Self-employment flows and persistence: a European comparative analysis," ISER Working Paper Series 2011-26, Institute for Social and Economic Research.
    12. Block, Joern & Kohn, Karsten, 2011. "Sozialpolitische Ziele der Gründungsförderung am Beispiel von Gründungen aus der Arbeitslosigkeit [Social policy as a motivation for start-up subsidies: supporting start-ups out of unemployment]," MPRA Paper 30775, University Library of Munich, Germany.
    13. Gaillard, Alexandre & Kankanamge, Sumudu, 2018. "Entrepreneurship, Labor Market Mobility and the Role of Entrepreneurial Insurance," TSE Working Papers 18-929, Toulouse School of Economics (TSE), revised Jan 2019.
    14. repec:jns:jbstat:v:227:y:2007:i:2:p:153-167 is not listed on IDEAS
    15. Michaelides, Marios & Benus, Jacob, 2012. "Are self-employment training programs effective? Evidence from Project GATE," Labour Economics, Elsevier, vol. 19(5), pages 695-705.
    16. Peter Thompson, 2011. "Necessity and Opportunity Entrepreneurs through the Business Cycle," Working Papers 1102, Florida International University, Department of Economics.
    17. Conen, Wieteke & Schippers, Johannes Jan & Schulze Buschoff, Karin, 2016. "Self-employed without personnel between freedom and insecurity," WSI Studies 05, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    18. Marios Michaelides, 2017. "Nascent Entrepreneurship and Race: Evidence from the GATE Experiment," University of Cyprus Working Papers in Economics 02-2017, University of Cyprus Department of Economics.
    19. Marios Michaelides & Scott Davis, 2016. "From unemployment to self-employment: the role of entrepreneurship training," University of Cyprus Working Papers in Economics 09-2016, University of Cyprus Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(6), pages 1453-1495, December.
    2. Enrico Santarelli & Marco Vivarelli, 2007. "Entrepreneurship and the process of firms’ entry, survival and growth," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(3), pages 455-488, June.
    3. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    4. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
    5. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
    6. Vivarelli, Marco, 2012. "Entrepreneurship in Advanced and Developing Countries: A Microeconomic Perspective," IZA Discussion Papers 6513, Institute of Labor Economics (IZA).
    7. McCann, Brian T. & Folta, Timothy B., 2012. "Entrepreneurial entry thresholds," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 782-800.
    8. Giuliano Guerra & Roberto Patuelli, 2016. "The Role of Job Satisfaction in Transitions into Self–Employment," Entrepreneurship Theory and Practice, , vol. 40(3), pages 543-571, May.
    9. Catherine Laffineur & Saulo Dubard Barbosa & Alain Fayolle & Emeran Nziali, 2017. "Active labor market programs’ effects on entrepreneurship and unemployment," Small Business Economics, Springer, vol. 49(4), pages 889-918, December.
    10. Peter van der Zwan & Ingrid Verheul & Roy Thurik & Isabel Grilo, 2009. "Entrepreneurial Progress: Climbing the Entrepreneurial Ladder in Europe and the US," Tinbergen Institute Discussion Papers 09-070/3, Tinbergen Institute, revised 17 Mar 2010.
    11. Tamvada, Jagannadha Pawan, 2010. "The Dynamics of Self-employment in a Developing Country: Evidence from India," MPRA Paper 20042, University Library of Munich, Germany.
    12. Frank M. Fossen, 2007. "Risky Earnings, Taxation and Entrepreneurial Choice: A Microeconometric Model for Germany," SOEPpapers on Multidisciplinary Panel Data Research 29, DIW Berlin, The German Socio-Economic Panel (SOEP).
    13. Marco Vivarelli, 2012. "Entrepreneurship and Post-Entry Performance: the Microeconomic Evidence," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1286, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    14. Paul A. Coomes & Jose Fernandez & Stephan F. Gohmann, 2013. "The Rate of Proprietorship Among Metropolitan Areas: The Impact of the Local Economic Environment and Capital Resources," Entrepreneurship Theory and Practice, , vol. 37(4), pages 745-770, July.
    15. Rachel G. Childers, 2011. "Being One'S Own Boss: How Does Risk Fit In?," The American Economist, Sage Publications, vol. 56(1), pages 48-58, May.
    16. Luis Medrano-Adán & Vicente Salas-Fumás & J. Sanchez-Asin, 2015. "Heterogeneous entrepreneurs from occupational choices in economies with minimum wages," Small Business Economics, Springer, vol. 44(3), pages 597-619, March.
    17. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(2), pages 277-305.
    18. Nathalie Colombier & David Masclet, 2008. "Intergenerational correlation in self employment: some further evidence from French ECHP data," Small Business Economics, Springer, vol. 30(4), pages 423-437, April.
    19. Sander Wennekers & Roy Thurik & André Stel & Niels Noorderhaven, 2010. "Uncertainty Avoidance and the Rate of Business Ownership Across 21 OECD Countries, 1976–2004," Springer Books, in: Andreas Freytag & Roy Thurik (ed.), Entrepreneurship and Culture, chapter 0, pages 271-299, Springer.
    20. Frank M. Fossen, 2012. "Risk Attitudes and Private Business Equity," Discussion Papers of DIW Berlin 1209, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    self-employment; entrepreneurship; entry rate; start-ups; unemployment; pseudo-panel; age and cohort effects;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp2561. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.