Income Taxes and Entrepreneurial Choice: Empirical Evidence from Germany

Entrepreneurial activity is often regarded as an engine for economic growth and job creation. Through tax policy, governments possess a potential lever to influence the decisions of economic agents to start and close small businesses. In Germany, the top marginal income tax rates were reduced exclusively for entrepreneurs in 1994 and 1999/2000. These tax reforms provided two naturally defined control groups that enable us to exploit the legislation changes as "natural experiments". First, the tax rate reductions did not apply to freelance professionals (Freiberufler), and second, entrepreneurs with earnings below a certain threshold were not affected. Using data from two different sources, the SOEP and the Mikrozensus (LFS), we analyse the effect of the tax cuts on transitions into and out of self-employment and on the rate of self-employment. We apply a "difference-in-difference-in-difference" estimation technique within a discrete time hazard rate model. The results indicate that the decrease in tax rates did not have a significant effect on the self-employment decision.Taxation, entrepreneurship, natural experiment, difference-in-difference-in-difference estimation

The German SAVE Survey: Documentation and Methodology

The purpose of this document is to describe methodological details of the German SAVE survey and to provide users of SAVE with all necessary information for working with the publicly available SAVE dataset.

The German SAVE survey: documentation and methodology

The purpose of this document is to describe methodological details of the German SAVE survey and to provide users of SAVE with all necessary information for working with the publicly available SAVE dataset.

Kinderlose Frauen vs. Frauen ohne Kinder : zum Problem der Messung der Kinderlosigkeit in Deutschland

In der Öffentlichkeit ist häufig davon die Rede, dass jede dritte westdeutsche Frau und sogar mehr als 40 % der westdeutschen Akademikerinnen kinderlos bleiben. Diese Angaben zur Kinderlosigkeit beruhen meist auf Auswertungen des Mikrozensus. Die Verwendung des Mikrozensus zur Abschätzung der Kinderlosigkeit ist allerdings umstritten. In diesem Artikel soll deshalb ein Überblick über Schätzungen zur Kinderlosigkeit in Deutschland gegeben werden.Geburtenrate; Akademische Berufe; Bildungsabschluss; Mikrozensus; Deutschland; OECD-Staaten

Risky Business – The Role of Individual Risk Attitudes in Occupational Choice

This study analyzes the relationship of individual risk attitudes and occupational sorting with respect to occupational earnings risk. By using the German Mikrozensus, a precise measure for earnings risk is computed as the occupation-wide standard deviation of wages. Following the procedure proposed by Bonin (2007), this earnings risk measure is used as dependent variable in cross-sectional and panel data estimations using the SOEP data of 2004 and 2006, including a measure of the individual willingness to take risks. The significant relationship in cross-sectional analyses vanishes when controlling for unobserved heterogeneity. Cross-sectional results seem to be driven by the correlation of unobserved ability and willingness to take risks, and are potentially biased by an attenuation bias due to unstable risk preferences. This study contributes to the existing literature by showing the importance of controlling for unobserved heterogeneity and instability of attitudes when examing the effects of personality traits in labor market decisions.Risk attitudes; occupational sorting; earnings risk; mundlak transformation

The Employment of Mothers: Recent Developments and their Determinants in East and West Germany

We apply German Mikrozensus data for the period 1996 to 2004 to investigate the employment status of mothers. Specifically, we ask whether there are behavioral differences between mothers in East and West Germany, whether these differences disappear over time, and whether there are differences in the developments for high vs. low and medium skilled females. We find substantial differences in the employment behavior of East and West German mothers. German family policy sets incentives particularly for low income mothers not to return to the labor market after birth. East German mothers' employment outcomes matches that expected based on these policy incentives: over time East German mothers with low earnings potentials appear to adopt West German low employment patterns.mothers, parental leave, East Germany, employment, child care

The intergenerational transmission of educational attainment in East and West Germany

"Socialist societies often emphasized the abolition of traditional social classes. To achieve this objective, educational opportunities were at times 'actively managed' and allocated to children of less educated parents. What happened to these patterns after the demise of socialist rule in Eastern Europe? We study the development of educational mobility after the fall of the iron curtain in East Germany and compare the relevance of parental educational background for secondary schooling outcomes in East and West Germany. Based on data from the German Mikrozensus we find that educational mobility is lower in East than in West Germany and that it has been falling in East Germany after unification. While the educational advantage of girls declined over time, having many siblings presents a more substantial disadvantage in East than in West Germany." (Author's abstract, IAB-Doku) ((en))Bildungsmobilität, Intergenerationsmobilität, Eltern, Kinder, Qualifikationsniveau, Schullaufbahnwahl, Gymnasium, Ostdeutschland, Westdeutschland, Bundesrepublik Deutschland

Non-marital births in East Germany after unification

In comparison to other European countries, West Germany displays relatively low rates of non-marital childbearing. Since the 1960, there has been a postponement of first birth, an increase in the age at first marriage and an increase in childlessness. Nevertheless, childbearing and marriage remained strongly coupled. In the former East Germany, on the other hand, non-marital childbearing was relatively high compared to other European countries and particularly compared to West Germany. In 1989, the ratio of non-marital births had reached 33 percent. Overwhelmingly, researchers blamed GDR policies for high non-marital birth rates. However, after the breakdown of the GDR regime, the high East German non-marital birth rates did not rebound to West German levels but they sky-rocked, reaching 50 percent in 1999. Using data from the German micro-census of the year 1997, we investigate the hypothesis that high nonmarital births reflect a high labor market orientation among East German women with children. Our empirical results reveal two different patterns in East and West Germany. While in the West a high labor market orientation is indeed related to lower marriage risks, we find the reversed pattern in East Germany. East German women with a college degree and/ or women who have a relatively higher educational attainment than their male partners are more likely to get married when they have children.

Transatlantic Differences in Labour Markets: Changes in Wage and Non-Employment Structures in the 1980s and the 1990s

Rising wage inequality in the U.S. and Britain and rising continental European unemployment have led to a popular view in the economics profession that these two phenomena are related to negative relative demand shocks against the unskilled, combined with flexible wages in the Anglo-Saxon countries, but institutional rigidities in continental Europe ('Krugman hypothesis'). This paper tests this hypothesis based on seven large person-level data sets for the 1980s and the 1990s. I use a more sophisticated categorisation of low-skilled workers than previous studies, which highlights the distinction between German workers with and without apprenticeship training. I find evidence for the Krugman hypothesis when Germany is compared to the U.S. However, supply changes differ considerably between countries, with Britain experiencing enormous increases in skill supply explaining the relatively constant British skill premium in the 1990shttp://deepblue.lib.umich.edu/bitstream/2027.42/40148/3/wp762.pd

The Employment of Mothers - Recent Developments and their Determinants in East and West Germany

We apply German Mikrozensus data for the period 1996 to 2004 to investigate the employment status of mothers. Specifically, we ask whether there are behavioral differences between mothers in East and West Germany, whether these differences disappear over time, and whether there are differences in the developments for high and low skilled females. We find substantial differences in the employment behavior of East and West German mothers. German family policy sets incentives particularly for low income mothers not to return to the labor market after birth. This seems to affect the development of East-West German employment differences as East German women with low earnings potentials appear to adopt West German low employment patterns over time.employment, mothers, parental leave, East Germany, child care