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

Amelie Constant and Klaus Zimmermann ()

Small Business Economics, 2006, vol. 26, issue 3, 279-300

Abstract: This paper uses a state of the art three-stage estimation technique to identify the determinants of the self-employed immigrant and native men in Germany. Their making is surprisingly alike. Employing data from the German Socioeconomic Panel 2000 (GSOEP) 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 with foreign passports living 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. Copyright Springer 2006

Keywords: Entrepreneurship; immigrants; occupational choice; self-employment; wage differentials; J23; M13; J24; J61; J31 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (111)

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DOI: 10.1007/s11187-005-3004-6

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