December 2008

IZA DP No. 3900: Self-Employment Dynamics, State Dependence and Cross-Mobility Patterns

This paper analyzes the mobility between self-employment, wage employment and non-employment. Using data for men in West Germany, we find strong true state dependence in all three states. Moreover, compared to wage employment, non-employment increases the probability of self-employment significantly, and self-employment goes along with a higher risk of future non-employment.