Alina Sorgner

Why did self-employment increase so strongly in Germany?

Germany experienced a unique rise in the level of self-employment in the first two decades following unification. Applying the nonlinear 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 in solo self-employment and in self-employment in former socialist East Germany.

Occupational choice and self-employment: Are they related?

Often, a person will become an entrepreneur only after a period of dependent employment, suggesting that occupational choices precede entrepreneurial choices. We investigate the relationship between occupational choice and self-employment. The findings suggest that the occupational choice of future entrepreneurs at the time of labor market entry is partly guided by a taste for skill variety, the prospect of high earnings, and occupational earnings risk. Entrepreneurial intentions may also emerge after gaining work experience in a chosen occupation. We find that occupations characterized by high levels of unemployment and earnings risk, relatively many job opportunities, and high self-employment rates foster the founding of an own business. Also, people who fail to achieve an occupation-specific income have a tendency for self-employment.

Stepping Forward: Personality Traits, Choice of Profession, and the Decision to Become Self-Employed

We argue that entrepreneurial choice proceeds in at least in two steps, with vocational choice nearly always preceding choice of employment status, whether that be self-employment or dependent employment. Since the two decisions are interrelated, analysis of entrepreneurial choice as a single act may lead to inconsistent estimates of the factors that determine the decision to launch a business venture. Our empirical analysis utilizes a bivariate probit model that jointly estimates both decisions. The results support our argument that entrepreneurial choice is a two-stage decision process.

Entrepreneurship and Creative Professions – A Micro-Level Analysis

It has widely been recognized that creativity plays an immense role not only for arts, sciences, and technology, but also for entrepreneurship, innovation, and thus, economic growth. We analyze the level and the determinants of self-employment in creative professions at the level of individuals. The analysis is based on the representative micro data of the German Socio-Economic Panel (SOEP). The findings suggest that people in creative professions appear more likely to be self-employed and that a high regional share of people in the creative class increases an individuals likelihood of being an entrepreneur. Investigating the determinants of entrepreneurship within the creative class as compared to non-creative professions reveals only some few differences.

Historical shocks and persistence of economic activity: evidence on self-employment from a unique natural experiment

ABSTRACT This paper investigates the persistence of self-employment in the districts of Kaliningrad, a Russian exclave, between 1925 and 2010. The area experienced a number of disruptive historical shocks during this period. This setting rules out the fact that the persistence of self-employment can be explained by the persistence of institutions and culture. Nevertheless, a high level of persistence of industry-specific self-employment rates is found. It is argued that a historical tradition of entrepreneurship created an awareness about the entrepreneurial potential of regions among the new population that was yielded after the collapse of the Soviet Union. This effect seems to be higher in regions where a specific industry was advanced in terms of technology use.

The Automation of Jobs: A Threat for Employment or a Source of New Entrepreneurial Opportunities?

New and emerging technologies pose a serious challenge for the future of employment. As machines learn to accomplish increasingly complex production tasks, the concern arises that automation will wipe out a great number of jobs. This paper investigates the relationship between the risk posed by the automation of jobs and individual-level occupational mobility using a representative German household survey. It provides an overview of current trends and developments on the labor markets due to the automation of jobs. It also describes the most recent dynamics of self-employment and relates it to the risk of the automation of jobs. The results suggest that the expected occupational changes such as losing a job, demotion at one’s current place of employment, or starting a job in a new field are likely to be driven by the high occupation-specific risk of automation. However, the switch to self-employment, both with and without employees, is more likely to occur from paid employment in occupations with a low risk of automation. Hence, the rising level of entrepreneurial activities is less likely due to jobs becoming obsolete over the course of automation, but rather due to the high number of opportunities offered by the digital age. The issues addressed within the paper provide room for further investigation. Particularly, an important question concerns which additional skills workers in jobs with a high risk of automation should acquire in order to make themselves less susceptible to the negative consequences of such a change. More research is needed in order to develop educational strategies to make workers less susceptible to job loss due to automation.

Worker Personality: Another Skill Bias Beyond Education in the Digital Age

We present empirical evidence suggesting that technological progress in the digital age will be biased not only with respect to skills acquired through education but also with respect to noncognitive skills (personality). We measure the direction of technological change by estimated future digitalization probabilities of occupations, and noncognitive skills by the Big Five personality traits from several German worker surveys. Even though we control extensively for education and experience, we find that workers characterized by strong openness and emotional stability tend to be less susceptible to digitalization. Traditional indicators of human capital thus measure workers’ skill endowments only imperfectly.

Historical Shocks and Persistence of Economic Activity: Evidence from a Unique Natural Experiment

This paper investigates the persistence of entrepreneurship in the region of Kaliningrad between 1925 and 2010. During this time period the area experienced a number of extremely disruptive shocks including; devastation caused by World War II, a nearly complete replacement of the native German population by Soviets, and 45 years under an anti-entrepreneurial socialist economic regime followed by a shock-type transition to a market economy. Nevertheless, we find a surprisingly high level of persistence of industry-specific self-employment rates in the districts of the Kaliningrad region. Our analysis suggests that persistence of entrepreneurship is higher in regions with a history of successful entrepreneurship. That is, in regions where a specific industry was particularly efficient and entrepreneurial activity was especially pronounced.