The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?

39 Pages Posted: 5 Jan 2005

See all articles by Amelie F. Constant

Amelie F. Constant

Princeton University; UNU-MERIT; CESifo

Klaus F. Zimmermann

Global Labor Organization (GLO); UNU-MERIT; Maastricht University, Department of Economics; Free University Berlin; University of Bonn; Centre for Economic Policy Research (CEPR); Journal of Population Economics

Date Written: December 2004

Abstract

This paper uses a state of the art three-stage technique to identify the characteristics of the self-employed immigrant and native men in Germany and to understand their underlying drive into self-employment. Employing data from the German Socioeconomic Panel 2000 release we find that self-employment is not significantly affected by exposure to Germany or by human capital. But this choice has a very strong intergenerational link and it is also related to homeownership and financial worries. While individuals are strongly pulled into self-employment if it offers higher earnings, immigrants are additionally pushed into self-employment when they feel discriminated. Married immigrants are more likely to go into self-employment, but less likely when they have young children. Immigrants living with foreign passports in ethnic households are more likely self-employed than native Germans. The earnings of self-employed men increase with exposure to Germany, hours worked and occupational prestige; they decrease with high regional unemployment to vacancies ratios. Everything else equal, the earnings of self-employed Germans are not much different from the earnings of the self-employed immigrants, including those who have become German citizens. However, immigrants suffer a strong earnings penalty if they feel discriminated against while they receive a premium if they are German educated.

Keywords: entrepreneurship, self-employment, occupational choice, immigrants, wage differentials

JEL Classification: J23, M13, J24, J61, J31

Suggested Citation

Constant, Amelie F. and Zimmermann, Klaus F., The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike? (December 2004). Available at SSRN: https://ssrn.com/abstract=643642

Amelie F. Constant

Princeton University ( email )

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Klaus F. Zimmermann (Contact Author)

Global Labor Organization (GLO) ( email )

Bonn
Germany

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UNU-MERIT ( email )

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Netherlands

Maastricht University, Department of Economics ( email )

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University of Bonn

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Germany

Centre for Economic Policy Research (CEPR)

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United Kingdom

Journal of Population Economics

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