Do entrepreneurs really earn less?
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Based on large representative German household survey data, we compare incomes of the self-employed with those of paid employees. We find that the entrepreneurial income gap is largest for those holding a tertiary degree, but in two directions: positive for employers (self-employed with further employees) and negative for solo entrepreneurs. Entrepreneurs holding a tertiary degree also face the greatest income variation. However, some solo self-employed earn more than their employed counterparts, in particular those with a university entrance degree as the highest level of education.
KeywordsIncome Entrepreneurship Self-employment Germany
JEL classificationL26 D22 D31 J24 J31
We gratefully acknowledge the support of the Research Data Center of the German Statistical Offices of the Laender at the DIW Berlin. We are indebted to Thomas Åstebro, David Audretsch, Marco Caliendo, John Haltiwanger, Bruce Ross Larson, Adam Lederer, Simon Parker, and Utz Weitzel, and four anonymous referees for comments that helped us to substantially improve this paper.
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