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What Explains the Gender Earnings Gap in Self-Employment? A Decomposition Analysis with German Data

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  • Lechmann, Daniel S. J.

    () (University of Erlangen-Nuremberg)

  • Schnabel, Claus

    () (University of Erlangen-Nuremberg)

Abstract

Using a large data set for Germany, we show that both the raw and the unexplained gender earnings gap are higher in self-employment than in paid employment. Applying an Oaxaca-Blinder decomposition, more than a quarter of the difference in monthly self-employment earnings can be traced back to women working fewer hours than men. In contrast variables like family background, working time flexibility and career aspirations do not seem to contribute much to the gender earnings gap, suggesting that self-employed women do not earn less because they are seeking work-family balance rather than profits. Differences in human capital endowments account for another 13 percent of the gap but segregation does not contribute to the gender earnings gap in a robust way.

Suggested Citation

  • Lechmann, Daniel S. J. & Schnabel, Claus, 2012. "What Explains the Gender Earnings Gap in Self-Employment? A Decomposition Analysis with German Data," IZA Discussion Papers 6435, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp6435
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    References listed on IDEAS

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    1. Gema Álvarez & Carlos Gradín & M. Soledad Otero, 2009. "Self-employment in Spain: Transition and earnings differential," Working Papers 0907, Universidade de Vigo, Departamento de Economía Aplicada.
    2. Kristy Eastough & Paul W. Miller, 2004. "The Gender Wage Gap in Paid- and Self-Employment in Australia," Australian Economic Papers, Wiley Blackwell, vol. 43(3), pages 257-276, September.
    3. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521728355, March.
    4. Semykina, Anastasia & Linz, Susan J., 2007. "Gender differences in personality and earnings: Evidence from Russia," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 387-410, June.
    5. Williams, Donald R., 2002. "Returns to education and experience in self-employment: Evidence from Germany," IRISS Working Paper Series 2002-04, IRISS at CEPS/INSTEAD.
    6. repec:hhs:iuiwop:521 is not listed on IDEAS
    7. Sandra Gottschalk & Michaela Niefert, 2013. "Gender differences in business success of German start-up firms," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 18(1), pages 15-46.
    8. Leung, Danny, 2006. "The male/female earnings gap and female self-employment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(5), pages 759-779, October.
    9. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521899604, March.
    10. Aysit Tansel, 2001. "Wage Earners, Self Employed and Gender in the Informal Sector in Turkey," Working Papers 0102, Economic Research Forum, revised 01 Nov 2001.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    self-employment; self-employed; earnings differential; entrepreneurship; gender pay gap; Germany;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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