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How Much of a Socialist Legacy? The Reemergence of Entrepreneurship in the East German Transformation to a Market Economy

Michael Fritsch (), Elisabeth Bublitz (), Alina Rusakova () and Michael Wyrwich ()
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Alina Rusakova: School of Economics and Business Administration, Friedrich-Schiller-University Jena

Authors registered in the RePEc Author Service: Alina Sorgner

No 2012-042, Jena Economic Research Papers from Friedrich-Schiller-University Jena

Abstract: The 40 years of socialist regime in East Germany were characterized by a massive anti-entrepreneurship policy. We investigate the reemergence of entrepreneurship in East Germany during its transformation to a market economy following the collapse of the East German state in 1989. It took about 15 years until self-employment levels in East Germany reached those of West Germany. Despite this catch up, we find a number of peculiarities in East German self-employment that appear to be a continuing legacy of the socialist period. In particular, older and better-educated East Germans have a relatively low propensity for starting an own business. Moreover, East German workers tend to have a lower variety of skills than their West German counterparts, which could explain a lower propensity for start up in the early years after reunification. Despite this socialist imprint, we also find considerable continuity in the levels of self-employment in the 1920s and those after transition to a market economy, suggesting the existence of a long-lasting regional entrepreneurship culture.

Keywords: Entrepreneurship; self-employment; new business formation; transformation; East Germany (search for similar items in EconPapers)
JEL-codes: L26 O11 (search for similar items in EconPapers)
Date: 2012-07-16
New Economics Papers: this item is included in nep-ent, nep-his, nep-sbm and nep-tra
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Published as "How much of a socialist legacy? The re-emergence of entrepreneurship in the East German transformation to a market economy", in: Small Business Economics 43 (2012), 427-446.

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Journal Article: How much of a socialist legacy? The re-emergence of entrepreneurship in the East German transformation to a market economy (2014) Downloads
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