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Drivers of Self-Employment - A Multivariate Decomposition Analysis for the Case of Germany

  • Michael Fritsch

    ()

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Alexander Kritikos

    ()

    (German Institute for Economic Research (DIW Berlin), and University of Potsdam)

  • Alina Sorgner

    ()

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

We analyze the sources of the rise in the levels of self-employment in Germany since reunification by applying the non-linear Blinder-Oaxaca decomposition technique. This analysis is performed separately for East and West Germany in order to account for the East German recovery of entrepreneurship after 40 years of socialist regime. We find different results for self-employed people with employees and solo- entrepreneurs. The main factors determining changes in the level of self-employment are demographic developments, the shift toward service sector employment, and a higher share of population holding a tertiary degree. The analysis also suggests that changes in personal attitudes toward self-employment might be responsible for the particular increase of solo-entrepreneurship.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2013-006.

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Date of creation: 17 Jan 2013
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Handle: RePEc:jrp:jrpwrp:2013-006
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  1. Michael Fritsch, 2004. "Entrepreneurship, entry and performance of new business compared in two growth regimes: East and West Germany," Journal of Evolutionary Economics, Springer, vol. 14(5), pages 525-542, December.
  2. Wennekers, Sander & Thurik, Roy, 1999. "Linking Entrepreneurship and Economic Growth," Small Business Economics, Springer, vol. 13(1), pages 27-55, August.
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  4. Marco Caliendo & Frank M. Fossen & Alexander S. Kritikos, 2011. "Personality Characteristics and the Decision to Become and Stay Self-Employed," SOEPpapers on Multidisciplinary Panel Data Research 369, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. Michael Fritsch & Elisabeth Bublitz & Alina Rusakova & Michael Wyrwich, 2012. "How Much of a Socialist Legacy? The Reemergence of Entrepreneurship in the East German Transformation to a Market Economy," Jena Economic Research Papers 2012-042, Friedrich-Schiller-University Jena.
  6. Verheul, Ingrid & Thurik, Roy & Grilo, Isabel & van der Zwan, Peter, 2012. "Explaining preferences and actual involvement in self-employment: Gender and the entrepreneurial personality," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 325-341.
  7. Fitzenberger, Bernd & Kohn, Karsten & Wang, Qingwei, 2006. "The Erosion of Union Membership in Germany: Determinants, Densities, Decompositions," ZEW Discussion Papers 06-66, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Fairlie, Robert W, 1999. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 80-108, January.
  9. Michael Fritsch, 2011. "New Business Formation and Regional Development: A Survey and Assessment of the Evidence," Discussion Papers of DIW Berlin 1127, DIW Berlin, German Institute for Economic Research.
  10. Bates, Timothy, 1995. "Self-employment entry across industry groups," Journal of Business Venturing, Elsevier, vol. 10(2), pages 143-156, March.
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  14. André van Stel & Roy Thurik & Sander Wennekers & Martin Carree, 2010. "The relationship between entrepreneurship and economic development: is it U-shaped?," Scales Research Reports H200824, EIM Business and Policy Research.
  15. David Audretsch, 2009. "The entrepreneurial society," The Journal of Technology Transfer, Springer, vol. 34(3), pages 245-254, June.
  16. Wyrwich, Michael, 2013. "Can socioeconomic heritage produce a lost generation with regard to entrepreneurship?," Journal of Business Venturing, Elsevier, vol. 28(5), pages 667-682.
  17. Roy Thurik & Andreas Freytag, 2006. "Entrepreneurship and its determinants in a cross-country setting," Scales Research Reports H200616, EIM Business and Policy Research.
  18. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
  19. Fuchs-Schundeln, Nicola & Alesina, Alberto, 2007. "Good-Bye Lenin (Or Not?): The Effect of Communism on People's Preferences," Scholarly Articles 4553032, Harvard University Department of Economics.
  20. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
  21. Fritsch, Michael & Kritikos, Alexander S. & Rusakova, Alina, 2012. "Who Starts a Business and Who is Self-Employed in Germany," IZA Discussion Papers 6326, Institute for the Study of Labor (IZA).
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