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Do entrepreneurs really earn less?

Author

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  • Alina Sorgner

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

  • Michael Fritsch

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

  • Alexander Kritikos

    () (DIW, Berlin)

Abstract

Based on representative micro data for Germany, we compare the incomes of self-employed with those of wage workers. Our results show that the median self-employed entrepreneur with employees earns significantly more than the median salaried employee, while the median solo entrepreneur earns less. However, solo entrepreneurship pays for those with a university entrance degree but no further professional qualification as well as for those who were in the upper percentiles of the income distribution in their previous salaried job. Surprisingly, the variation in hourly incomes of solo entrepreneurs is higher than that of entrepreneurs with employees.

Suggested Citation

  • Alina Sorgner & Michael Fritsch & Alexander Kritikos, 2014. "Do entrepreneurs really earn less?," Jena Economic Research Papers 2014-029, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2014-029
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    Cited by:

    1. Rietveld, Cornelius A. & Hessels, Jolanda & van der Zwan, Peter, 2015. "The stature of the self-employed and its relation with earnings and satisfaction," Economics & Human Biology, Elsevier, vol. 17(C), pages 59-74.
    2. T. H. Gindling & Nadwa Mossaad & David Newhouse, 2016. "How Large are Earnings Penalties for Self-Employed and Informal Wage Workers?," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-39, December.
    3. Sorgner, Alina, 2017. "Jobs at Risk!? Effects of Automation of Jobs on Occupational Mobility," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168088, Verein für Socialpolitik / German Economic Association.
    4. Jolanda Hessels & José María Millán & Concepción Román, 2015. "The Importance of Being in Control of Business: Work Satisfaction of Employers, Own-account Workers and Employees," Tinbergen Institute Discussion Papers 15-047/VII, Tinbergen Institute.
    5. Michael Fritsch & Alina Sorgner & Michael Wyrwich, 2018. "Self-Employment and Well-Being Across Institutional Contexts," Jena Economic Research Papers 2018-005, Friedrich-Schiller-University Jena.
    6. repec:kap:sbusec:v:51:y:2018:i:1:d:10.1007_s11187-017-9917-z is not listed on IDEAS
    7. Schneck, Stefan, 2018. "The Effect of Self-Employment on Income Inequality," GLO Discussion Paper Series 281, Global Labor Organization (GLO).
    8. Elisabeth Bublitz & Michael Fritsch & Michael Wyrwich, 2015. "Balanced Skills and the City: An Analysis of the Relationship between Entrepreneurial Skill Balance, Thickness, and Innovation," Economic Geography, Clark University, vol. 91(4), pages 475-508, October.
    9. repec:kap:sbusec:v:52:y:2019:i:2:d:10.1007_s11187-018-0095-4 is not listed on IDEAS
    10. Fritsch, Michael & Sorgner, Alina & Wyrwich, Michael, 2019. "Types of Institutions and Well-Being of Self-Employed and Paid Employees in Europe," IZA Discussion Papers 12336, Institute of Labor Economics (IZA).
    11. Pakura, Stefanie, 2015. "Unternehmerische Motivation und Wiedergründungsbereitschaft: Eine empirische Untersuchung deutscher Unternehmensneugründungen in der Frühentwicklungsphase," Lüneburger Beiträge zur Gründungsforschung 10, Leuphana University of Lüneburg, Department of Entrepreneurship & Start-up Management.
    12. repec:hig:fsight:v:11:y:2017:i:3:p:37-48 is not listed on IDEAS
    13. Pahnke, André & Welter, Friederike, 2019. "The German Mittelstand: Antithesis to the Silicon Valley entrepreneurship model?," Working Papers 01/19, Institut für Mittelstandsforschung (IfM) Bonn.

    More about this item

    Keywords

    Income; Entrepreneurship; Self-Employment; Start-ups; Germany;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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