The Impact on Earnings When Entering Self-Employment – Evidence for Germany

39 Pages Posted: 12 Feb 2013

See all articles by Johannes Martin

Johannes Martin

RWTH Aachen University - School of Business and Economics

Date Written: February 1, 2013

Abstract

Using data of the German Socio-Economic Panel (GSOEP) earnings differentials between self-employed and wage-employed workers in the German labor market are explored. Previous research based on US data reports lower incomes for entrepreneurs. In contrast to that, the findings of this contribution suggest the opposite for German entrepreneurs. They have considerably higher earnings than wage-employed workers. Furthermore, there is a significant and positive effect on earnings when entering self-employment. This holds true when it is also taken into account that workers usually report a smaller firm size and work longer after beginning an entrepreneurial occupation.

Keywords: Self-employment, Human Capital, Earnings, GSOEP, Entrepreneurship

JEL Classification: L26, J31, J32

Suggested Citation

Martin, Johannes, The Impact on Earnings When Entering Self-Employment – Evidence for Germany (February 1, 2013). SOEPpaper No. 537, Available at SSRN: https://ssrn.com/abstract=2214877 or http://dx.doi.org/10.2139/ssrn.2214877

Johannes Martin (Contact Author)

RWTH Aachen University - School of Business and Economics ( email )

Templergraben 64
52056 Aachen, 52056
Germany

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