Leaving Unemployment for Self-employment. A Discrete Duration Analysis of Determinants and Stability of Self-Employment among Former Unemployed

The paper investigates the determinants and the success of self-employment among former unemployed. Self-employment has become an important re-employment opportunity during the last decade due to increasing subsidies. The econometric analysis is carried out using discrete hazard rate models on 14 waves of the German Socio-Economic Panel, covering the period from 1983 to 1996. I do not find any effects of unemployment duration on the transition from unemployment to self-employment. Moreover, unemployed people entering self-employment have higher skills than the average of the unemployed population and self-employment seems to be more stable that paid-employment would have been, because people face a lower risk of becoming unemployed again.

Reize, Frank (2000), Leaving Unemployment for Self-employment. A Discrete Duration Analysis of Determinants and Stability of Self-Employment among Former Unemployed, ZEW Discussion Paper Nr. 00-26, Mannheim.