What Explains the Gender Earnings Gap in Self-Employment? A Decomposition Analysis with German Data

32 Pages Posted: 31 Mar 2012

See all articles by Daniel S. J. Lechmann

Daniel S. J. Lechmann

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Claus Schnabel

University of Erlangen-Nuremberg; IZA Institute of Labor Economics

Abstract

Using a large data set for Germany, we show that both the raw and the unexplained gender earnings gap are higher in self-employment than in paid employment. Applying an Oaxaca-Blinder decomposition, more than a quarter of the difference in monthly self-employment earnings can be traced back to women working fewer hours than men. In contrast variables like family background, working time flexibility and career aspirations do not seem to contribute much to the gender earnings gap, suggesting that self-employed women do not earn less because they are seeking work-family balance rather than profits. Differences in human capital endowments account for another 13 percent of the gap but segregation does not contribute to the gender earnings gap in a robust way.

Keywords: earnings differential, entrepreneurship, gender pay gap, Germany, self-employed, self-employment

JEL Classification: J31, J71

Suggested Citation

Lechmann, Daniel S. J. and Schnabel, Claus, What Explains the Gender Earnings Gap in Self-Employment? A Decomposition Analysis with German Data. IZA Discussion Paper No. 6435, Available at SSRN: https://ssrn.com/abstract=2032003

Daniel S. J. Lechmann (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Claus Schnabel

University of Erlangen-Nuremberg ( email )

Institut für Wirtschaftsforschung
Lange Gasse 20
D-90403 Nuernberg
Germany
+49 911 5302 330 (Phone)
+49 911 5302 721 (Fax)

HOME PAGE: http://https://www.arbeitsmarkt.rw.fau.de/english-version/staff/prof-dr-claus-schnabel/

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
62
Abstract Views
539
rank
421,008
PlumX Metrics