Occupational deregulation, mixed embeddedness, and immigrant self-employment : The 2004 reform of the German crafts code as a quasi-experiment

As global migration numbers have continued to increase over the last thirty years, so have the number of self-employed immigrants. Faced with the task of integrating into the destination country’s labor market, millions of immigrants turn to self-employment. Nonetheless, it still remains unclear why some immigrants choose self-employment, while others do not. To investigate this question, I developed a novel identification strategy in which I used the 2004 reform of the German Crafts Code, which abolished occupational licensing in 53 of 94 crafts and trades, as a quasi-experiment. Specifically, I asked how expanding self-employment opportunities affect the self-employment decisions of women and immigrants and how the earnings of self-employed women and immigrants are affected by expanding self-employment opportunities. Using a difference-in-differences and regression discontinuity design, this dissertation provides some first causal evidence of the effect of occupational deregulation on the self-employment outcomes of women and immigrants. The results demonstrate that removing entry restrictions for self-employment enables those groups with more resources to open up their own business and increase their earnings, while those with less resources are unable to do so. These results suggest that individual resources become more important as the occupational structure becomes less rigid.