The entrepreneurship literature links the higher probability that children of self-employed parents will later become self-employed to parental role models and socialization by their parents. We add an exploratory study that examines whether parental interference in their children’s affairs lays the foundation for later entrepreneurship. We show that, on average, self-employed parents are not more likely to interfere in their children’s affairs than parents in regular employment. However, this null effect masks differences across fathers and mothers. Self-employed fathers interfere more in the affairs of their sons, while self-employed mothers interfere less in their daughters’ affairs. Moreover, we find that parental interference has a negative impact on sons’ self-perception of their entrepreneurial competencies. We discuss the implications of these results and present promising avenues for future research.

The willingness to take risks is one of the overall best predictors of individual self-employment. Most papers compare the willingness to take risks of randomly selected paid employees and self-employed. The contribution of this explorative paper is to revisit the view that risk-taking is mainly an attribute of the self-employed person by explicitly considering that the self-employed and household members usually form an economic unit with blurred boundaries between the business and the private sphere. Specifically, we examine the distribution of risk attitudes of partners within double-earner entrepreneurial households with the German Socio-Economic Panel. Our findings suggest that the more risk-averse partner is self-employed in almost three in ten entrepreneurial households. This finding is not well documented in theory and empirical research. Also, households with relatively risk-averse self-employed individuals differ in several ways from households where the self-employed are relatively more risk-tolerant. Moreover, the distribution of risk attitudes of partners might change over time. Promising avenues for further research are discussed. 

Due to the pandemic-induced economic crisis, self-employed individuals are currently suffering considerable income losses. The self-employed and the members in their households usually form an economic unit. As a consequence, the income cuts not only affect the self-employed themselves but also the rest of their household. We used the German Socio-Economic Panel (SOEP) to calculate how much income the self-employed are able to sacrifice to achieve a subjective barely sufficient household income, which we interpret as the minimum level to maintain the standard of living. Our results suggest that full-time self-employed are typically the bread-earners in their households and that, as a consequence, even moderate income losses of the self-employed often lead to problems in maintaining the living standards of their households. Conditional on individual and household characteristics, the self-employed with employees are found to live in households that are less resilient to income losses. Furthermore, a negative correlation between falling short of the barely adequate household income and wellbeing was discovered. Self-employed in households with less than adequate incomes also reported higher concerns about social cohesion. These results have implications for policy - especially in light of the economic crisis induced by the pandemic.

Employment growth is one of the most crucial indicators for economic policy. Existing studies show that only a small fraction of firms experience high growth rates and create the most new jobs. Making use of recentered influence function regressions, this study examines the effects of process and product innovations on the employment growth distribution. The analysis is based on firm data from Eastern European countries. The effects of process innovation on job creation are ambiguous. An increase in firms with products and services that are new to the market shape the upper tail of the employment growth distribution. Product and service innovations thus cause skewness of the employment growth distribution and are a major determinant of job creation. This study therefore presents evidence on whether and how innovation activities affect employment growth and contributes to the lively debate about how to foster employment growth.

This replication study contributes to the lively debate about firm-specific growth paths of new firms. Utilizing rich German administrative panel data (i.e., 895,459 young firms that submitted a turnover tax preregistration form between 2001 and 2011), the study empirically revisits new firms’ growth paths as documented in the JBV Insights paper of Coad et al. (2015). In line with their results, the empirical findings of this study corroborate that (a) growth paths of young firms are erratic, meaning that such growth paths cannot be easily sorted into a meaningful taxonomy and (b) young firms rarely persistently experience comparably high growth in sales over time. In addition, an analysis of the characteristics of persistently growing firms suggests that these tend to invest more in their founding period and are typically founded in the manufacturing industry.

The German Mittelstand is supposed to be the backbone of Germany’s economy. It earned this appraisal because of its outstanding number of companies and due to its notable status as an employer: In fact, 93.6 % of the total population of companies are Mittelstand enterprises and they employ more than six in ten employees subject to social insurance contributions (Wolter/Sauer 2017; Haunschild/Wolter 2010). We present some data sets provided by the IfM Bonn that can be accessed for scientific analysis regarding the Mittelstand.

It is well known that the self-employed are over-represented at the bottom as well as the top of the income distribution. This paper shifts the focus from the income situation of the self-employed to the distributive effects of a change in self-employment rates. With representative German data and unconditional quantile regression analysis we show that an increase in the proportion of self-employed individuals in the labor force increases income polarization by tearing down floors at the bottom and allowing higher income potentials at the very top of the hourly income distribution. Recentered influence function regression of inequality measures corroborate that self-employment is a source of income inequality in the labor market.

Young firms are known to grow at a faster rate than incumbents. With administrative firm data from Germany, we show that the higher growth rates indeed translate into upward mobility within the sector-specific firm size distribution. Young firms are therefore not only able to catch up with incumbents, but also able to grow larger in absolute values. Recentered influence function regression results reveal that young firms cause significant rank mobility within the stock of firms, which even holds when the local skewness of the firm size distribution is accounted for. The results clearly indicate a Schumpeterian growth process where young firms challenge established ones.

Established early stage investors decide to invest in new ventures after evaluating the propensity of success and the risk of failure. Consequently, it is of considerable importance that the founders invest substantial own financial means and are thus highly committed to business success. Despite its key role in practice, the entrepreneurs’ own financial commitment has not yet been discussed in an equity crowdfunding context. Applying a signalling approach, our empirical findings show that entrepreneurs with comparatively more ex ante financial commitment in their venture achieve significantly higher funding success. Moreover, our results suggest that financial commitment is the single most important variable determining funding success.

Many people are relatively unsatisfied with the democratic system as it currently exists. In this empirical research note, the authors present evidence that German workers, who perceive their own pay or top managers’ pay as unfair, are on average significantly less happy with the democracy in Germany. Thus, fairness perceptions in the labour market and of income inequality seem to have spillover effects on the overall satisfaction with the democratic system.

This paper analyzes the nexus between income comparisons and perceptions of unfair pay. We apply a large German household survey and conduct wage regressions to conclude whether individuals who perceive their wages as unfair earn significantly lower wages than fairly paid individuals with similar characteristics. We find that unfairly paid individuals earn significantly less than fairly paid counterparts. This suggests that unfairness perceptions with respect to wages are based on sound income comparisons with peers. We also contribute findings to the literature on reference points. When asked about a subjectively fair amount in Euros, unfairly paid individuals tend to claim much higher wages than fairly paid individuals with identical characteristics. Wage claims, thus, rest on additional factors.

Using survey data from 25 European countries, we can show that in most of the countries the self-employed are more satisfied with their jobs than employees. This paper aims to discuss the reasons why this is the case. The results show that part of the differences in job satisfaction between employees and self-employed individuals are due to creativity and autonomy in self-employment. This suggests that our results are in line with procedural utility theory (Benz and Frey, 2004, Benz and Frey, 2008). In other words, especially self-employed individuals seem to derive utility from the way outcomes are achieved.

As a result of the last major reform of the German social security system, not only long-term unemployed but also employed persons are entitled to a new benefit – called Unemployment Benefit II – if the total income is below a legally binding subsistence level. For a few years, almost every third employable recipient of this means-tested benefit has actually been an employed person. Adding a regional analysis of recent developments to the existing literature, this paper concludes that German federal states generally drift apart regarding employed recipients of Unemployment Benefit II. One possible explanation is a potentially higher social acceptance of low paid jobs in federal states with higher shares of employed persons receiving Unemployment Benefit II.  

The purpose of this paper is to describe whether workers in high positions and workers in low positions think differently about status and possible future career advancement opportunities. The paper uses German panel data to examine the effects of relative standing on individual satisfaction with the job, the propensity to change jobs, and intentions to start-up an enterprise in the near future. The relationship between relative wage positions and job satisfaction is inversely U-shaped. This is interpreted as evidence that low status translates into low utility while employees with high relative standing seem to be more concerned about the lack of future career prospects in paid employment. Workers who gather utility from status and career advancement opportunities simultaneously are more satisfied with their jobs. The paper also shows that lower satisfaction with the job translates into considerations to leave the job. The paper aims to enhance the discussion about nonlinear effects in status considerations as well as future career advancement opportunities. The paper shows that workers in very high and very low positions value these important psychological traits differently.

This paper presents cross-country evidence that job satisfaction is higher for self-employed than for employees. We, however, do not stop at this point and examine the reasons why this is the case. Using data on 25 European countries, we show that individuals seem to derive utility from the way outcomes are achieved. In other words, our results are in line with procedural utility theory (Benz and Frey, 2004, 2008).

This research note utilizes German matched employer–employee data to investigate the relationship between mobility and relative wage positions within establishments for workers without university degrees. The main innovation involves the examination of non-linear effects, because previous literature mainly analyses mean linear effects. Our random-effects probit estimates of mobility suggest a non-linear U-shaped effect with respect to relative standing. This is plausible because workers in low relative wage positions might quit because of their low status and those in high relative wage positions because of their low career advancement opportunities. Consideration of non-linearities, thus, is a major improvement for the analysis of the effects of relative wage positions.

The authors analyze the importance of relative wage positions within firms in western Germany in the context of individual quit decisions as an inverse measure of job satisfaction. Using a linked employer-employee data set (LIAB) for the years 1996–2005 whose sample consists of full-time male prime-age workers in western Germany without college degrees, they ascertain whether workers find status or signal effects stronger motivators for quit decisions. They find that workers with higher relative wage positions within their firms are, on average, more likely to quit their jobs than those with lower relative wage positions and that workers who experience a loss in their relative wage positions are also more likely to accept a wage cut associated with their job transition. Overall, results suggest that a signal effect is, on average, stronger than a status effect.

The aim of this paper is twofold. First, we describe determinants for the use of short-time work during the economic recession 2008/2009. Second, post-crisis changes in turnover and employment are analyzed with focus on the use of short-time work. The analysis is restricted to firms in the manufacturing sector in Germany. We present evidence that small firms are less likely to utilize short-time work. With respect to the post-crisis economic development, multivariate analysis suggests that short-time work is significantly negatively correlated with employment growth even after accounting for changes in turnover. This might indicate a period of jobless growth after utilization of short-time work.

Because rational individuals know that they cannot always get what they want, they are  assumed  to  make  appropriate  adjustments.  However,  little  is  known  about  trade-off reasoning  in  labor  market  mobility  decision  making.  The  objective of  this  paper  is  to  analyze the effect of job-specific amenities on the decision to voluntarily accept wage cuts. Application of  German  household  data  reveals  that  voluntarily  mobile  workers  are  more  likely  to  accept lower wages when strain can be improved. In other words, the considered mobile workers trade off amenities and monetary rewards when changing employers.

Individuals who want to leave their employer usually raise the question whether mobility to a new employer pays off in the future. The paper contributes to this question by examining the consequences of labor market mobility in the medium term. Conclusions regarding whether an individual's wage trajectory at the new employer exceeds the one of the previous employer are drawn by application of an innovative procedure which involves the simultaneous investigation of wage trajectories at different employers. The main finding is that a considerable number of workers experience wage cuts which are of permanent nature. Only few of the transitions to lower wages pay off because of the steeper wage growth in the new job.