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

Amelie Constant and Klaus Zimmermann ()

No 1440, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: immigrants; entrepreneurship; self-employment; occupational choice; wage differentials (search for similar items in EconPapers)
JEL-codes: J23 J24 J31 J61 M13 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2004-12
New Economics Papers: this item is included in nep-eec, nep-ent and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published - published in: Small Business Economics, 2006, 26 (3), 279-300

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Journal Article: The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike? (2006)
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