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Do Entrepreneurs Really Earn Less?

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  • Sorgner, Alina
  • Fritsch, Michael
  • Kritikos, Alexander

Abstract

We compare, based on German data, the income of self-employed individuals with and without employees with the income of dependently employed individuals. Our results show that self-employed with employees tend to earn significantly higher incomes than their salaried counterparts, while with the exception of solo-entrepreneurs without vocational degree - the income of solo self-employed tends to be significantly lower than that of comparable employees. We also observe that self-employed people are able to improve their earnings within the first three years after start-up, when we compare their actual earnings to their income before the start-up.

Suggested Citation

  • Sorgner, Alina & Fritsch, Michael & Kritikos, Alexander, 2014. "Do Entrepreneurs Really Earn Less?," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100449, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc14:100449
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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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