Who Starts a Business and Who is Self-Employedin Germany

Based on representative data, the German Micro-Census, we provide an overview of thedevelopment of self-employment and entrepreneurship in Germany between 1991 and 2010,the first two decades after reunification. We investigate the socioeconomic background ofthese individuals, their education, previous employment status, and their income level. Weobserve a unique increase in self-employment in Germany by 40 percent which can partly beattributed to the transformation process of East Germany and to the shift to the servicesector. We notice a yearly start-up rate of 1 percent among the working population (almost 20percent of them being restarters), a decision that pays for the majority of individuals in termsof income. Contrary to other countries, in Germany there is a positive relationship betweeneducational levels and the probability of starting a business....