Self-Employment: Way to End Unemployment? Empirical Evidence from German Pseudo-Panel Data

28 Pages Posted: 29 Jan 2007

See all articles by Daniela Glocker

Daniela Glocker

German Institute for Economic Research (DIW Berlin)

Viktor Steiner

Zentrum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research; IZA Institute of Labor Economics

Date Written: January 2007

Abstract

This paper contributes to the policy-relevant question whether self-employment is a way out of (long-term) unemployment. We estimate the relationship between the entry rate into self-employment and previous (long-term) unemployment on the basis of pseudo-panel data for Germany in the period 1996-2002. The estimation method accounts for cohort fixed effects and measurement errors induced by the pseudo panel structure. We find that previous (long-term) unemployment significantly increases entry rates into self-employment for both men and women. These effects are quantitatively important, both in absolute terms and compared to other potential determinants of self-employment transitions, such as age, the level of vocational qualification and certain household characteristics.

Keywords: self-employment, entrepreneurship, entry rate, start-ups, unemployment, pseudo-panel, age and cohort effects

JEL Classification: J23, J64, C35

Suggested Citation

Glocker, Daniela and Steiner, Viktor, Self-Employment: Way to End Unemployment? Empirical Evidence from German Pseudo-Panel Data (January 2007). IZA Discussion Paper No. 2561. Available at SSRN: https://ssrn.com/abstract=960005

Daniela Glocker

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

Mohrenstra├če 58
Berlin, 10117
Germany

Viktor Steiner (Contact Author)

Zentrum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

IZA Institute of Labor Economics

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

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