Why Did Self-Employment Increase so Strongly in Germany?

40 Pages Posted: 14 Feb 2015

See all articles by Michael Fritsch

Michael Fritsch

University of Jena - School of Economics and Business Administration

Alexander Kritikos

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften; German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Alina Sorgner

University of Jena

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Abstract

Germany experienced a unique rise in the level of self-employment in the first two decades following unification. Applying the non-linear Blinder-Oaxaca decomposition technique, we find that the main factors driving these changes in the overall level of self-employment are demographic developments, the shift towards service sector employment, and a larger share of population holding a tertiary degree. While these factors explain most of the development in self-employment with employees and the overall level of self-employment in West Germany, their explanatory power is much lower for the stronger increase of solo self-employment and of self-employment in former socialist East Germany.

Keywords: self-employment, non-linear Blinder-Oaxaca decomposition technique, entrepreneurship, Germany

JEL Classification: L26, D22

Suggested Citation

Fritsch, Michael and Kritikos, Alexander S. and Sorgner, Alina, Why Did Self-Employment Increase so Strongly in Germany?. IZA Discussion Paper No. 8818, Available at SSRN: https://ssrn.com/abstract=2564951

Michael Fritsch (Contact Author)

University of Jena - School of Economics and Business Administration ( email )

Carl-Zeiss-Str. 3
D-07743 Jena
Germany

Alexander S. Kritikos

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften ( email )

15230 Frankfurt (Oder)
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Alina Sorgner

University of Jena ( email )

Fürstengraben 1
Jena, 07743
Germany

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