Minimum Wages and the Rise in Solo Self-Employment

Angelika Ganserer, Terry Gregory, Ulrich Zierahn

Research output: Working paperAcademic

Abstract

Solo self-employment is on the rise despite less favorable working conditions compared to traditional jobs. We show that the introduction of minimum wages in German industries led to an increase in the share of solo self-employment by up to 8.5 percentage points. We explain our findings within a substitution-scale model that predicts a decline in demand and earnings perspectives for high-skilled dependent workers, whenever the negative scale effect (overall decline in industry employment) dominates the positive substitution effect (shift towards high-skilled workers). Such situations can occur during an economic downturn in combination with a strong and rising minimum wage bite.
Original languageEnglish
PublisherIZA Institute for the Study of Labor
Pages1-57
Publication statusPublished - May 2022

Publication series

NameIZA Discussion Paper

Keywords

  • synthetic control method
  • solo self-employment
  • minimum wages

Fingerprint

Dive into the research topics of 'Minimum Wages and the Rise in Solo Self-Employment'. Together they form a unique fingerprint.

Cite this