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Abstract:
Nascent entrepreneurs are people who are engaged in creating new ventures. This chapter reviews the international evidence on how many of them are there around the world, what they are doing, who they are, what makes them different, and which ones see their vision through to eventual start-up.

nascent entrepreneurs, literature review

Abstract:
In a recent paper Edward Lazear proposed the jack-of-all-trades view of entrepreneurship. Based on a coherent model of the choice between self-employment and paid employment he shows that having a background in a large number of different roles increases the probability of becoming an entrepreneur. The intuition behind this proposition is that entrepreneurs must have sufficient knowledge in a variety of areas to put together the many ingredients needed for survival and success in a business, while for paid employees it suffices and pays to be a specialist in the field demanded by the job taken. This paper contributes to the entrepreneurship literature by empirically testing Lazear's hypothesis using a large recent representative sample of the German population. The empirical estimation takes the rare events nature of becoming a nascent entrepreneur and the regional stratification of the sample into account. The results illustrate the statistical significance and economic importance of the jack-of-all-trades theory.

entrepreneurship, jack-of-all-trades theory, rare events logit, Germany

Abstract:
This paper tests the theory recently put forward by Edward Lazear that individuals with competence in many skills should have a higher probability of being self-employed than others. The empirical results for Germany support this jack-of-all-trades view.

Entrepreneurship, Jack-of-all-trades Theory, Germany

Abstract:
The focus of this paper is on the choice of the unemployed between becoming an entrepreneur or not. It contributes to the literature by empirically investigating two hitherto neglected issues: What is the impact of risk aversion and personal contact with a role model in shaping the decision to become an entrepreneur (controlling for standard demographic variables, i.e., sex, age, and education)? And given the personal characteristics and attitudes, how does the regional "entrepreneurial milieu" affect the decision to start a new business out of unemployment? The econometric study is based on data from a recent representative survey of the population in ten German planning regions. We use a version of the probit model that takes care of the regional stratification of the data, and the results of the nonlinear models are carefully interpreted and illustrated. We show that a high degree of risk aversion, and lack of personal contact with a young entrepreneur, both reduce the probability of starting one's own business. A favorable "regional entrepreneurial milieu" (proxied by higher levels of current start-up activity and larger shares of unemployed among the starters in a region) has a positive effect on the individual propensity to step into self-employment. All these impacts are not only statistically significant, but economically important, too.

Entrepreneurship, Unemployment, Germany, Regional Milieu

Abstract:
In western industrialized countries men are on average more than twice as active in entrepreneurship as women. Based on data from a recent representative survey of the adult population in Germany this paper uses an empirical model for the decision to become selfemployed to test for differences between women and men in the ceteris paribus impact of several characteristics and attitudes, taking the rare events nature of becoming an entrepreneur into account. Furthermore, a non-parametric approach using Mahalanobisdistance matching of man and woman which are as similar as possible in all characteristics and attitudes but the small difference is used to investigate the difference in the propensity to become self-employed by gender. A core finding is that the difference between men and women in both the extent and the effect of considering fear of failure to be a reason not to start one's own business is important for the explanation of the gender gap in entrepreneurship.

nascent entrepreneurs, gender differences in entrepreneurship, Germany

Abstract:
This paper contributes to empirical research in entrepreneurship by focusing on the link between two stylized facts that emerged from a number of studies for Germany and other countries: Entry rates differ between regions, and the propensity to become an entrepreneur is influenced by socio-demographic variables and attitudes. We develop a theoretical framework to discuss this link, and we test whether for a person of a given age, degree of schooling, attitude towards risk etc. regional variables do matter for the decision to start a new business ceteris paribus. Our econometric study is based on data for 10.000 persons from a recent representative survey of the population in ten German planning regions, the Regional Entrepreneurship Monitor (REM). We use a version of the probit model that takes care of the regional stratification of the data, and the results of the nonlinear models are carefully interpreted and illustrated. We find that the propensity to step into self-employment is, among others, higher for males, unemployed, people with contacts to a role model, and with past entrepreneurial experience, who live in more densely populated and faster growing regions with higher rates of new firm formation, while risk aversion and high prices of land have the opposite impact.

Nascent Entrepreneurs, Germany, Regions

Abstract:
While the role of exports in promoting growth in general, and productivity in particular, has been investigated empirically using aggregate data for countries and industries for a long time, only recently have comprehensive longitudinal data at the firm level been used to look at the extent and causes of productivity differentials between exporters and their counterparts which sell on the domestic market only. This paper surveys the empirical strategies applied, and the results produced, in 45 microeconometric studies with data from 33 countries that were published between 1995 and 2004. Details aside, exporters are found to be more productive than non-exporters, and the more productive firms self-select into export markets, while exporting does not necessarily improve productivity.

Exports, productivity, literature survey, micro data

Abstract:
Folklore has it that the comparatively low proportion of self-employed in Germany is in part due to a habit that might be termed "stigmatization of failure": taking a second chance to build one's own firm after failing as a self-employed is said to be much more difficult here than in other countries. This paper uses data from a large recent survey in ten German planning regions to document that 18 percent of today's firm owners founded a firm in the past that went out of business in between, and that 8 percent of people who went out of business with their former firm are actively engaged in starting a new business today. The determinants of such a restart are investigated econometrically. It turns out that both individual and regional factors are important for the probability of taking a second chance: This probability is negatively related to age, attitude towards risk, and the share of persons in the region who failed in the past, while it is positively related to personal contacts with a young entrepreneur and the regional share of nascent entrepreneurs.

Entrepreneurship, Germany, Restart

Abstract:
Nascent entrepreneurs are people who are (alone or with others) actively engaged in creating a new venture and who expect to be the owner or part owner of this start-up. Given that newly founded firms are important for the economic development of nations and regions, and that nascent entrepreneurs are by definition important for the foundation of new firms, information about nascent entrepreneurs is important for understanding crucial aspects of the economy. The relevance of detailed information on nascent entrepreneurs at the regional level, and the lack of it for Germany, let us start the research project Regional Entrepreneurship Monitor (REM) Germany in 2000. As part of this project, we performed a representative survey of the adult population in 10 German regions, plus a survey and interviews with local experts in the field of entrepreneurship in 2001. A second wave followed in 2003. This paper summarizes our findings using data from these surveys and interviews.

nascent entrepreneurs, Regional Entrepreneurship Monitor, Germany

Abstract:
Using a large recent representative sample of the German population this paper contributes to the entrepreneurship literature by empirically testing the hypothesis that young and small firms are hothouses for nascent entrepreneurs. The empirical estimation takes the rare events nature of becoming a nascent entrepreneur and the regional stratification of the sample into account. Controlling for various individual characteristics and attitudes (sex, age, risk aversion, presence of a role model in the family, and the width of professional background) we illustrate both the statistical significance and the economic importance for entrepreneurship of work experience in a firm that is both young and small.

entrepreneurship, young and small firms, rare events logit, Germany

Abstract:
This paper presents the first empirical test with German establishment level data of a hypothesis derived by Helpman, Melitz and Yeaple in a model that explains the decision of heterogeneous firms to serve foreign markets either trough exports or foreign direct investment: only the more productive firms choose to serve the foreign markets, and the most productive among this group will further choose to serve these markets via foreign direct investments. Using a non-parametric test for first order stochastic dominance it is shown that, in line with this hypothesis, the productivity distribution of foreign direct investors dominates that of exporters, which in turn dominates that of national market suppliers.

Exports, foreign direct investment, productivity, heterogeneous firms

Abstract:
Although works councils are a core element of the German system of industrial relations, there is little reliable information on their incidence and coverage. This paper uses data from the nationally representative IAB establishment panel to fill this gap. We examine the frequency of works councils by establishment size and broad sector for eastern and western Germany, while at the same time charting the determinants of their presence. Furthermore, we identify newly established works councils and the circumstances of their formation. Finally, we discuss the consequences of our findings for economic analysis of the institution and for public policy.

Works Councils, Works Constitution Act, Germany

Abstract:
In her recent survey, Carola Frege concludes that economic analysis of the works council has reached a 'dead end'. The present paper offers a very different assessment. The evolving economic literature is shown to follow three distinct phases, the last of which contains some of the most positive evaluations to date of works council impact on establishment performance. Although these estimates are exaggerated, and the effects of works councils are likely to be small on average, the new literature redirects our research focus towards factors producing swings around this average, including differences in works council types and their workplace environments.

Abstract:
In a survey published in the British Journal of Industrial Relations, Frege (2002) evaluates research on the German works council from the perspective of several disciplines, including economics. Ultimately, she concludes that economic analysis of the works council has reached a "dead end". The present treatment offers a very different conclusion based on a more encompassing review of the evidence. It will identify three distinct phases in the economic analysis of codetermination at the workplace. This framework is key to understanding the progress that has been made in analysing the effect of works councils on firm performance, while highlighting some important measurement issues and diversity of finding. Given the recent vintage of much of the German research, it is inevitable that Frege considers studies from just the first two phases. Rather interestingly, it is the neglected third phase of research that contains some of the most favourable evaluations to date of Works council impact.

works councils, codetermination, quits, productivity, investment, profitability, employee involvement/high performance workplace practices

Abstract:
Using representative individual-level data from the first round of the European Social Survey fielded in 2002/03, this paper provides an empirical analysis of unionization in 18 countries of the European Union. We show that union density varies considerably in Europe, ranging from 84 per cent in Denmark to 11 per cent in Portugal. Estimating identical models for each country, we find that individuals' probability of union membership is significantly affected by their personal characteristics, their attitudes and the characteristics of their workplace, whereas social factors seem to play a minor role. The presence of a union at the workplace and employees' attitudes concerning strong unions are the two variables with the most wide-spread effects on unionization.

Union membership, union density, Europe

Abstract:
According to the German disability law, or Schwerbehindertengesetz, either six percent of all jobs in an establishment must be occupied by disabled employees or the firm has to pay a penalty of DM 200 per month for every job under consideration. This note reports results from the first econometric investigation of the impact of this rule on job dynamics in small firms. Based on data from the IAB Establishment Panel we find no clear-cut evidence that employment in establishments at the first threshold of the law reacts differently on demand shocks than establishments below or above the threshold.

Threshold Values, Disability Law, Labor Demand

Abstract:
Although comprehensive data from official statistics on new firm formation and entrepreneurs starting a new business are lacking in Germany, we know from empirical studies that entry rates differ between regions, and that the propensity to become an entrepreneur is influenced by socio-demographic variables like sex and age. The focus of our paper is on the link of these two stylised facts. Our econometric study is based on data for 10,000 persons from a recent representative survey of the population in ten German planning regions. We use a version of the probit model that takes care of the regional stratification of the data, and the results of the nonlinear models are carefully interpreted and illustrated. We show that the region matters for the decision to start a new business ceteris paribus, i.e. after controlling for sex, age, education etc. In a second step we peek inside the black box of the regional effect by showing that the regional level of current start-up activity has a positive ceteris paribus effect on the propensity to become an entrepreneur, while the share of self-employed in the region does not matter. The consequences of these findings for regional policies to encourage new firm entry are discussed briefly in the concluding section.

Entrepreneurship, Germany, Regional Milieu Joachim

Abstract:
Using quantile regression and a rich cross section data set for German manufacturing plants this paper documents that the impact of plant characteristics on export activities varies along the conditional size distribution of the export/sales ratio.

Exports, quantile regression, heterogeneous firms

Abstract:
An empirical analysis of various waves of the ALLBUS social survey shows that union density fell substantially in West Germany from 1980 to 2000. Such a negative trend can be observed for men and women and for different groups of the workforce. Repeated crosssectional analyses suggest that a number of personal, occupational and attitudinal variables such as sex, occupational status, firm size and political orientation play a role in the unionization process, although the influence of many variables is not robust over time. While the results are consistent with cost-benefit considerations on the sides of employees and unions, individualization theory and social custom theory is not consistently supported by our estimations.

Trade Union Membership, Germany, Micro Data

Abstract:
In a sharp break with past German research, some recent estimates have suggested that plants with work councils have 25 to 30 per cent higher productivity than their works-councilfree counterparts. Such findings can only serve to buttress the strong theoretical and policy interest in the German institution, not least in an environment of union decline. In the present paper, we estimate the effects of works councils on productivity, 1997-2000, using a nationally representative German data set. We recoup the works council effect by estimating translog production functions, stochastic frontier production functions, and a model in first differences. Once we focus on a core sample of establishments with 21 to 100 employees in which the powers of the works council are a datum, it emerges that the positive productivity differential is a chimera. By the same token, neither is the effect negative. This result is important in its own right given the sharply opposing findings of past empirical research and the partisan positions these have helped sustain.

Works Councils, Production Functions, Panel Data, Germany

Abstract:
An empirical analysis of various waves of the ALLBUS social survey shows that the level and the structure of unionization has become more and more similar in eastern and western Germany in the period 1992 to 2000. The originally high level of union density in eastern Germany has dropped below that of western Germany, and union membership has been falling steadily in both parts of the country since 1992. Repeated cross-sectional analyses indicate that the factors influencing individuals' probability of union membership have converged over time between western and eastern Germany. After an assimilation period of about ten years the same set of variables can be used to explain unionization in post-socialist eastern Germany and in traditionally capitalist western Germany.

Trade Union Membership, Germany, Micro Data

Abstract:
Based on data from a recent representative survey of the adult population in Germany this paper documents that the patterns of variables influencing nascent and infant entrepreneurship are quite similar and broadly in line with our theoretical priors - both types of entrepreneurship are fostered by the width of experience and a role model in the family, and hindered by risk aversion, while being male is a supporting factor. Results of this study using cross section data are in line with conclusions from longitudinal studies for other countries finding that between one in two and one in three nascent entrepreneurs become infant entrepreneurs, and that observed individual characteristics - with the important exception of former experience as an employee in the industry of the new venture - tend to play a minor role only in differentiating who starts and who gives up.

nascent entrepreneurs, infant entrepreneurs, Germany

Abstract:
Using panel data from Spain Farinas and Ruano (IJIO 2005) test three hypotheses from a model by Hopenhayn (Econometrica 1992): (H1) Firms that exit in year t were in t-1 less productive than firms that continue to produce in t. (H2) Firms that enter in year t are less productive than incumbent firms in year t. (H3) Surviving firms from an entry cohort were more productive than non-surviving firms from this cohort in the start year. Results for Spain support all three hypotheses. This paper replicates the study using unique newly available panel data sets for all manufacturing plants from Germany (1995-2002). Again, all three hypotheses are supported empirically.

entry, exit, productivity

Abstract:
This paper traces the profound decline in German unionism over the course of the last three decades. Today just one in five workers is a union member, and it is now moot whether this degree of penetration is consistent with a corporatist model built on encompassing unions. The decline in union membership and density is attributable to external forces that have confronted unions in many countries (such as globalization and compositional changes in the workforce) and to some specifically German considerations (such as the transition process in post-communist Eastern Germany) and sustained intervals of classic insider behavior on the part of German unions. The "correctives" have included mergers between unions, decentralization, and wages that are more responsive to unemployment. At issue is the success of these innovations. For instance, the trend toward decentralization in collective bargaining hinges in part on the health of that other pillar of the dual system of industrial relations, the works council. But works council coverage has also declined, leading some observers to equate decentralization with deregulation. While this conclusion is likely too radical, German unions are at the cross roads. It is argued here that if they fail to define what they stand for, are unable to increase their presence at the workplace, and continue to lack convincing strategies to deal with contemporary economic and political trends working against them, then their decline may become a rout.

union membership, union density, union mergers, collective bargaining, works

Abstract:
A recent survey of 54 micro-econometric studies reveals that exporting firms are more productive than non-exporters. On the other hand, previous empirical studies show that exporting does not necessarily improve productivity. One possible reason for this result is that most previous studies are restricted to analysing the relationship between a firm's export status and the growth of its labour productivity, using the firms' export status as a binary treatment variable and comparing the performance of exporting and non-exporting firms. In this paper, we apply the newly developed generalised propensity score (GPS) methodology that allows for continuous treatment, that is, different levels of the firms' export activities. Using the GPS method and a large panel data set for German manufacturing firms, we estimate the relationship between a firm's export-sales ratio and its labour productivity growth rate. We find that there is a causal effect of firms' export activities on labour productivity growth. However, exporting improves labour productivity growth only within a sub-interval of the range of firms' export-sales ratios.

export-sales ratio, labour productivity, continuous treatment, dose-response function

Abstract:
18 studies using data from 20 highly developed, developing, and less developed countries document that average wages in exporting firms are higher than in non-exporting firms from the same industry and region. The existence of these so-called exporter wage premia is one of the stylized facts found in the emerging literature on the microeconometrics of international trade. This paper uses a large and rich set of linked employer-employee data from Germany to demonstrate that these premia vanish when individual characteristics of the employees and of the work place are controlled for.

exports, wages, exporter wage premia, linked employer-employee data, Germany

Abstract:
Using a large panel data set we investigate whether works councils act as sand or grease in the operation of German firms. Stochastic production frontier analysis indicates that establishments with and without a works council do not exhibit significant differences in efficiency.

Works Council, Codetermination, Production Frontier Analysis, Germany

Abstract:
Using unique recently released nationally representative high-quality longitudinal data at the plant level, this paper presents the first comprehensive evidence on the relationship between exports and productivity for Germany, a leading actor on the world market for manufactured goods. It applies and extends the now standard approach from the international literature to document that the positive productivity differential of exporters compared to non-exporters is statistically significant, and substantial, even when observed firm characteristics and unobserved firm specific effects are controlled for. For West German plants (but not for East German plants) some empirical evidence for self-selection of more productive firms into export markets is found. There is no evidence for the hypothesis that plants which start to export perform better in the three years after the start than their counterparts which do not start to sell their products on the world market. Results for West Germany support the hypothesis that the productivity differential between exporters and non-exporters is at least in part the result of a market driven selection process in which those export starters that have low productivity at starting time fail as a successful exporter in the years after the start, and only those that were more productive at starting time continue to export.

Exports, productivity, micro data, Germany

Abstract:
An empirical analysis of various waves of the ALLBUS social survey shows that union density fell substantially in western Germany from 1980 to 2004 and in eastern Germany from 1992 to 2004. Such a negative trend can be observed for men and women and for different groups of the workforce. Regression estimates indicate that the probability of union membership is related to a number of personal and occupational variables such as age, public sector employment and being a blue collar worker (significant in western Germany only). A decomposition analysis shows that differences in union density over time and between eastern and western Germany to a large degree cannot be explained by differences in the characteristics of employees. Contrary to wide-spread perceptions, changes in the composition of the workforce seem to have played a minor role in the fall in union density in western and eastern Germany.

union membership, union density, Germany, decomposition

Abstract:
Using quantile regressions and a rich cross section data set for German manufacturing plants, this paper reports that the impact of works councils on labor productivity varies along the conditional distribution of value added per employee. It emerges that the positive and statistically significant effect of works council presence estimated by ordinary least squares now vanishes for large parts of this distribution. According to our results, such an effect can only be detected in plants at the top end of the conditional productivity distribution - plants that can be considered 'over achievers.' We would speculate that this might be because only highly competent managers can cooperate with a works council in a way that much enhances productivity.

labor productivity, works councils, quantile regressions, heterogeneous firms

Abstract:
Using unique new data and a recently introduced non-linear decomposition technique this paper shows that the huge difference in the propensity to export between West and East German plants is to a large part due to differences in firm size and human capital intensity.

exports, micro data, West Germany, East Germany

Abstract:
This paper uses an unbalanced panel data set for exporting firms from manufacturing industries in one German federal state, Lower Saxony, to investigate the micro-structure of the recent export boom. Looking at data for 1995/96 to 2001/02 it is demonstrated that a considerable number of plants starts and stops exporting in each year, but that most of the export dynamics is due to positive and negative changes of exports in plants that continue to export. A small fraction made of four to five percent of all exporting plants is responsible for around 70 to 80 percent of the gross increase in exports. Firms with expanding and contracting exports are found simultaneously in all broad sectors, technology classes and firm size classes. Patterns of export behavior differ widely between the plants over the periods investigated.

Exports, business cycle, establishment panel data

Abstract:
Using a knowledge production framework and a rich set of plant level data this study demonstrates that in Germany firms that are active on international markets as exporters or foreign direct investors do generate more new knowledge than firms which sell on the national market only. These differences are not only due to a larger firm size, or different industries, or the use of more researchers in these firms, but due to the fact these globally engaged firms learn more from external sources, too. The importance of these knowledge sources varies with the type of innovation. These results, which are broadly in line with the findings of a recent study using UK firm level data, can help to explain the strong positive correlation between productivity and international activities of firms. Firms that are active on markets beyond the national borders generate higher levels of new knowledge that feed into higher productivity.

Exports, foreign direct investment, knowledge production function, Germany

Abstract:
Theory suggests that firms confront a hold-up problem in dealing with workplace unionism: unions will appropriate a portion of the quasi rents stemming from long-lived capital. As a result, firms may be expected to limit their exposure to rent seeking by reducing investments, among other things. Although there is some empirical support for this prediction in firm-level studies for the United States, we investigate whether this is also the case in the different institutional context of Germany where the works council is the analogue of workplace unionism. Using parametric and nonparametric methods and establishment panel data, we find no evidence that the formation (dissolution) of a works council has an unfavorable (favorable) impact on investment.

works councils, investment, Germany

Abstract:
Research in wage differentials has a long tradition. Prominent reasons why people make more or less money in the labor market include personal characteristics of the employee (e.g., human capital or gender), job characteristics (working conditions demanding compensating wage differentials), and characteristics of the employer (e.g., industry or firm size). An emerging empirical literature suggests that one hitherto overlooked firm characteristic matters, too: Employers which are in business for a longer period of time tend to pay higher wages. Using a unique rich set of linked employer-employee data we present first empirical evidence on this firm age - wage nexus for Germany. We find that older firms pay on average higher wages for workers with the same broadly defined degree of formal qualification. This firm age differential vanishes after controlling for further worker characteristics and other firm characteristics besides age; if anything, younger firms pay more ceteris paribus. These results are in line with findings from a recent study by Brown and Medoff using U.S. data.

Establishment Age, Wage, Linked Employer-employee Data, Germany

Abstract:
This paper presents the first nonparametric test whether German works councils go hand in hand with higher labor productivity or not. It distinguishes between establishments that are covered by collective bargaining or not. Results from a Kolmogorov-Smirnov test for first order stochastic dominance tend to indicate that pro-productive effects are found in firms with collective bargaining only. However, the significance level of the test statistic is higher than a usually applied critical level. This somewhat weak evidence casts doubts on the validity of results from recent parametric approaches using a regression framework that point to high positive effects of works councils on productivity.

works councils, productivity, stochastic dominance

Abstract:
Using unique recently released nationally representative high-quality data at the plant level, this paper presents the first comprehensive evidence on the relationship between productivity and size of the export market for Germany, a leading actor on the world market for manufactured goods. It documents that firms that export to countries inside the euro-zone are more productive than firms that sell their products in Germany only, but less productive than firms that export to countries outside the euro-zone, too. This is in line with the hypothesis that export markets outside the euro-zone have higher entry costs that can only by paid by more productive firms.

exports, productivity, micro data, Germany

Abstract:
A recent survey of 54 micro-econometric studies reveals that exporting firms are more productive than non-exporters. On the other hand, previous empirical studies show that exporting does not necessarily improve productivity. One possible reason for this result is that most previous studies are restricted to analysing the relationship between a firm's export status and the growth of its labour productivity, using the firms' export status as a binary treatment variable and comparing the performance of exporting and non-exporting firms. In this paper, we apply the newly developed generalised propensity score (GPS) methodology that allows for continuous treatment, that is, different levels of the firms' export activities. Using the GPS method and a large panel data set for German manufacturing firms, we estimate the relationship between a firm's export-sales ratio and its labour productivity growth rate. We find that there is a causal effect of firms' export activities on labour productivity growth. However, exporting improves labour productivity growth only within a sub-interval of the range of firms' export-sales ratios.

Export-sales ratio, labour productivity, continuous treatment, dose-response function

Abstract:
An empirical analysis of various waves of the ALLBUS social survey shows that union density fell substantially in West Germany from 1980 to 2000. Such a negative trend can be observed for men and women and for different groups of the workforce. Repeated cross-sectional analyses suggest that a number of personal, occupational and attitudinal variables such as sex, occupational status, firm size and political orientation play a role in the unionization process, although the influence of some variables is not robust over time. While the results are consistent with cost-benefit considerations on the sides of employees and unions, our estimations do not support individualization theory and they cast some doubt on a crucial prediction from social custom theory.

Abstract:
An empirical analysis of various waves of the ALLBUS social survey shows that union density fell substantially in West Germany from 1980 to 2000. Such a negative trend can be observed for men and women and for different groups of the workforce. Repeated cross-sectional analyses suggest that a number of personal, occupational and attitudinal variables such as sex, occupational status, firm size and political orientation play a role in the unionization process, although the influence of some variables is not robust over time. While the results are consistent with cost-benefit considerations on the sides of employees and unions, our estimations do not support individualization theory and they cast some doubt on a crucial prediction from social custom theory.

union membership, union density, Germany

Abstract:
This paper contributes to the flourishing literature on exports and productivity by using a unique newly available panel of exporting establishments from the manufacturing sector of Germany from 1995 to 2004 to test three hypotheses derived from a theoretical model by Hopenhayn (Econometrica 1992): (H1) Firms that stop exporting in year t were in t-1 less productive than firms that continue to export in t. (H2) Firms that start to export in year t are less productive than firms that export both in year t-1 and in year t. (H3) Firms from a cohort of export starters that still export in the last year of the panel were more productive in the start year than firms from the same cohort that stopped to export in between. While results for West Germany support all three hypotheses, this is only the case for (H1) and (H2) in East Germany.

export entry, export exit, productivity

Abstract:
Using a large recent representative sample of the adult German population this paper demonstrates that nascent necessity and nascent opportunity entrepreneurs are different with respect to some of the characteristics and attitudes considered to be important for becoming a nascent entrepreneur, and that they behave differently. Given the lack of longitudinal data, however, we have no information about the performance of entrepreneurs from both groups in the longer run.

necessity entrepreneurship, opportunity entrepreneurship, Germany, REM

Abstract:
Using representative data from the German social survey ALLBUS 2002 and the European Social Survey 2002/03, this paper provides the first empirical analysis of trade union never-membership in Germany. We show that between 54 and 59 percent of all employees in Germany have never been members of a trade union. Individuals' probability of never-membership is significantly affected by their personal characteristics (in particular age, education and status at work), their political orientation and (to a lesser degree) their family background, and by broad location. In addition, occupational and workplace characteristics play a significant role. Most important in this regard is the presence of a union at the workplace.

union membership, never-membership, Germany

Abstract:
This paper contributes to the empirical literature on the co-determination – firm performance nexus by using a new type of data that combines information on the co-determination status of enterprises from a commercial data base and supplementary information collected from the firms with comprehensive data on the firms from official statistics. The data allow for the first time a direct comparison of enterprises from the same size class with and without codetermination at the supervisory board level. It is shown that one-third codetermination at the supervisory board level in limited-liability companies from West German manufacturing industries seems to be neither positively nor negatively related to two core firm performance indicators, productivity and profitability.

one-third co-determination, firm performance, Germany

Abstract:
Using unique recently released nationally representative high-quality longitudinal data at the enterprise level for Germany, this paper presents the first comprehensive evidence on the relationship between exports and profitability. It documents that the positive profitability differential of exporters compared to non-exporters is statistically significant, though rather small, when observed firm characteristics and unobserved firm specific effects are controlled for. In contrast to nearly all empirical studies on the relationship between productivity and exports we do not find any evidence for self-selection of more profitable firms into export markets. Due to the sampling frame of the data used we cannot test the hypothesis that firms which start exporting perform better in the years after the start than their counterparts which do not start. Instead, we use a newly developed continuous treatment approach and show that exporting improves the profitability almost over the whole range of the export-sales ratio. Only firms that generate 90 percent and more of their total sales abroad do not benefit from exporting in terms of an increased rate of profit. This means, that the usually observed higher productivity of exporters is not completely absorbed by the extra costs of exporting or by higher wages paid by internationally active firms.

exports, profitability, micro data, Germany

Abstract:
Using panel data from Spain Farinas and Ruano (IJIO 2005) test three hypotheses from a model by Hopenhayn (Econometrica 1992): (H1) Firms that exit in year t were in t-1 less productive than firms that continue to produce in t. (H2) Firms that enter in year t are less productive than incumbent firms in year t. (H3) Surviving firms from an entry cohort were more productive than non-surviving firms from this cohort in the start year. Results for Spain support all three hypotheses. This paper replicates the study using a unique newly available panel data sets for all manufacturing plants from Germany (1995 - 2002). Again, all three hypotheses are supported empirically.

entry, exit, productivity

Abstract:
This paper uses a newly available comprehensive panel data set for manufacturing enterprises from 2001 to 2005 to document the first empirical results on the relationship between imports and productivity for Germany, a leading actor on the world market for goods. Furthermore, for the first time the direction of causality in this relationship is investigated systematically by testing for self-selection of more productive firms into importing, and for productivity-enhancing effects of imports ('learning-by-importing'). We find a positive link between importing and productivity. From an empirical model with fixed enterprise effects that controls for firm size, industry, and unobservable firm heterogeneity we see that the premia for trading internationally are about the same in West and East Germany. Compared to firms that do not trade at all two-way traders do have the highest premia, followed by firms that only export, while firms that only import have the smallest estimated premia. We find evidence for a positive impact of productivity on importing, pointing to self-selection of more productive enterprises into imports, but no evidence for positive effects of importing on productivity due to learning-by-importing.

imports, exports, productivity, enterprise panel data, Germany

Abstract:
In this note we cast some doubt on the claim put forward by David Blanchflower (2007) that the probability of being unionized follows an inverted U-shaped pattern in age with a maximum in the mid- to late 40s. By using a special test for an inverted U-shaped pattern that has not been applied to the age-membership nexus before, and by constructing exact confidence intervals for the maximum value, we demonstrate that at least for West Germany Blanchflower's hypothesis does not hold. Our findings suggest that more definitive evidence is needed before the existence of international unionization-age patterns can be taken for granted.

unionization, age, inverted U-shape, Germany

Abstract:
We use newly available representative panel data for manufacturing enterprises in West and East Germany to investigate the link between production-related subsidies and exports. We document that only a small fraction of enterprises is subsidized, and that exports and subsidies are positively related. Using a matching approach to investigate the causal effect of subsidies on export activities we find no impact of subsidies on the probability to start exporting, and only weak evidence for an impact of subsidies on the share of exports in total sales in West Germany but no evidence in East Germany.

subsidies, export, Germany, enterprise panel data

Abstract:
Using unique recently released nationally representative high-quality longitudinal data at the enterprise level for Germany, this paper presents the first comprehensive evidence on the relationship between exports and profitability. It documents that the positive profitability differential of exporters compared to non-exporters is statistically significant, though rather small, when observed firm characteristics and unobserved firm specific effects are controlled for. In contrast to nearly all empirical studies on the relationship between productivity and exports we do not find any evidence for selfselection of more profitable firms into export markets. Due to the sampling frame of the data used we cannot test the hypothesis that firms which start exporting perform better in the years after the start than their counterparts which do not start. Instead, we use a newly developed continuous treatment approach and show that exporting improves the profitability almost over the whole range of the export-sales ratio. Only firms that generate 90 percent and more of their total sales abroad do not benefit from exporting in terms of an increased rate of profit. This means, that the usually observed higher productivity of exporters is not completely absorbed by the extra costs of exporting or by higher wages paid by internationally active firms.

exports, profitability, micro data, Germany

Abstract:
While it is a stylized fact that exporting firms pay higher wages than non-exporting firms, the direction of the link between exporting and wages is less clear. Using a rich set of German linked employer-employee panel data we follow over time plants that start to export. We show that the exporter wage premium does already exist in the years before firms start to export, and that it does not increase in the following years. Higher wages in exporting firms are thus due to self-selection of more productive, better paying firms into export markets; they are not caused by export activities.

exports, wages, exporter wage premium, Germany

Abstract:
We use comparable micro level panel data for 14 countries and a set of identically specified empirical models to investigate the relationship between exports and productivity. Our overall results are in line with the big picture that is by now familiar from the literature: Exporters are more productive than non-exporters when observed and unobserved heterogeneity are controlled for, and these exporter productivity premia tend to increase with the share of exports in total sales; there is strong evidence in favor of self-selection of more productive firms into export markets, but nearly no evidence in favor of the learning-by-exporting hypothesis. We document that the exporter premia differ considerably across countries in identically specified empirical models. In a meta-analysis of our results we find that countries that are more open and have more effective government report higher productivity premia. However, the level of development per se does not appear to be an explanation for the observed cross-country differences.

Exports, productivity, micro data, international comparison

Abstract:
This paper examines the decision to enter the export market by German firms. While exports have played an important role in recent German business cycle movements, little is known about the export supply response of German firms. This paper presents a dynamic model of the export decision by a profit-maximizing firm. Using a panel of German manufacturing plants, we test for the role of plant characteristics and sunk costs in the entry decision. We find evidence for substantial sunk costs in export entry; exporting today by a plant increases the probability that the plant will export tomorrow by 50%. This advantage depreciates quickly, falling by two thirds in a year. We also find evidence that plant success, as measured by size and productivity, increases the likelihood of exporting.

Abstract:
Using representative individual-level data from the first round of the European Social Survey fielded in 2002/03, this article provides an empirical analysis of unionisation in 18 countries of the EU. We show that union density varies considerably in Europe, ranging from 84 per cent in Denmark to 11 per cent in Portugal. Estimating identical models for each country, we find that individuals' probability of union membership is significantly affected by their personal characteristics, their attitudes and the characteristics of their workplace, whereas social factors seem to play a minor role. The presence of a union at the workplace and employees' attitudes concerning strong unions are the two variables most strongly associated with unionisation.

Abstract:
While the role of exports in promoting growth in general, and productivity in particular, has been investigated empirically using aggregate data for countries and industries for a long time, only recently have comprehensive longitudinal data at the firm level been used to look at the extent and causes of productivity differentials between exporters and their counterparts which sell on the domestic market only. This paper surveys the empirical strategies applied, and the results produced, in 54 microeconometric studies with data from 34 countries that were published between 1995 and 2006. Details aside, exporters are found to be more productive than non-exporters, and the more productive firms self-select into export markets, while exporting does not necessarily improve productivity.

Abstract:
A new generation of data sets became available recently in the research data centres of the German statistical offices. These new data combine information for firms gathered in different surveys (or from other sources) that could not be analyzed jointly before. This paper offers a short description of these data, and gives examples of their use to demonstrate their research potential. Furthermore, and looking ahead to the next generation of data, it discusses an ongoing project, KombiFiD, that will for the first time offer access to linked firm level data collected by different data producing public institutions.

enterprise data, Germany, research data centres

Abstract:
Since 1920, the thrust of German law on workplace codetermination has changed on a number of occasions. We describe the latest swing of the legislative pendulum - favoring works council formation and competence - and evaluate the case for it. We provide new information on the extent of works councils before reviewing the evidence on their economic effects, focusing on some new results from matched-plant data. If the former evidence points to a codetermination deficit, this shortfall does not appear to have negative consequences for workplace productivity, profitability, and employment.

Abstract:
This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro-competitive effects of import penetration on the domestic industry disappear in the long run. The predictions for the short run are confirmed in an empirical study of the German clothing industry.

international trade, firm heterogeneity, productivity, clothing industry

Abstract:
This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro-competitive effects of import penetration on the domestic industry disappear in the long run. The predictions for the short run are confirmed in an empirical study of the German clothing industry.

international trade, firm heterogeneity, productivity, clothing industry

Abstract:
Using data from the social survey ALLBUS for West Germany in the period 1980 to 2006, this paper demonstrates that union members are on average older than non-unionized employees. The probability of being unionized shows the inverted U-shaped pattern in age conjectured by Blanchflower (BJIR 2007) only in very few years. It is demonstrated that both intra-cohort change and cohort replacement effects have played a roughly equal role in the substantial fall in union density since 1980. If older cohorts with high densities continue to be replaced by young cohorts with low densities, average union density will fall further.

union membership, union density, cohort effects, West Germany

Abstract:
This article discusses the use of enterprise- and establishment-level data from official statistics to document stylized facts, to motivate assumptions used in formal theoretical models, to test hypotheses derived from theoretical models, and to evaluate policy measures. It shows how these data can be accessed by researchers in Germany today and reports on recent developments that will offer new and improved datasets that combine data collected in separate surveys and by different agencies. The paper makes three recommendations for future developments in this area: (1) change the law to make the combination of data collected by different producers easier, (2) combine firm-level data across national borders and make these data available for researchers, and (3) find ways to enable researchers in Germany to work with confidential firm-level data via remote access 24 hours a day and 365 days per year.

firm level data, Germany, FiDASt, KombiFiD, AFiD

Abstract:
A new generation of data sets became available recently in the research data centres of the German statistical offices. These new data combine information for firms gathered in different surveys (or from other sources) that could not be analyzed jointly before. This paper offers a short description of these data, and gives examples of their use to demonstrate their research potential. Furthermore, and looking ahead to the next generation of data, it discusses an ongoing project, KombiFiD, that will for the first time offer access to linked firm level data collected by different data producing public institutions.

Enterprise data, Germany, research data centres

Abstract:
The Freeman-Lazear works council/worker involvement model is assessed over two distinct industrial relations regimes. In non union British establishments our measures of employee involvement are associated with improved economic performance, whereas for unionized plants negative results are detected. The suggestion is that local distributive bargaining can cause the wrong level of worker involvement to be chosen. Also consistent with the model is our finding that mandatory works councils do not impair, and may even improve, the performance of larger German establishments. Yet smaller plants with works councils under-perform, illustrating the problem of tailoring mandates to fit heterogeneous populations.

Abstract:
While Germany has a very open, export-oriented manufacturing sector, to date there has been little or no research on the role of exporting in German firm performance. This paper documents the significant differences between exporters and non-exporters and attempts to identify the sources of these disparities. Exporters are much larger, more capital-intensive, and more productive than non-exporters. However, the bulk of the evidence suggests that these performance characteristics predate entry into the export market. We find no positive effects on employment, wage or productivity growth after entry. Our results provide confirming evidence that success leads to exporting, rather than the reverse.