Why did self-employment increase so strongly in Germany?

Michael Fritsch, Alexander Kritikos and Alina Sorgner

Germany experienced a unique rise in the level of self-employment in the first two decades following unification. Applying the non-linear Blinder-Oaxaca decomposition technique, we find that the main factors driving these changes in the overall level of self-employment are demographic developments, the shift towards service sector employment, and a larger share of population holding a tertiary degree. While these factors explain most of the development in self-employment with employees and the overall level of self-employment in West Germany, their explanatory power is much lower for the stronger increase of solo self-employment and of self-employment in former socialist East Germany.

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Year of publication:	2015 ; This version: January 2015
Authors:	Fritsch, Michael ; Kritikos, Alexander ; Sorgner, Alina
Publisher:	Berlin : DIW
Subject:	Self-employment \| non-linear Blinder-Oaxaca decomposition technique \| entrepreneurship \| Germany \| Selbstständige \| Self-employed \| Deutschland \| Entrepreneurship \| Entrepreneurship approach \| Dekompositionsverfahren \| Decomposition method \| Unternehmensgründung \| Business start-up