Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/223511 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8439
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
We present new empirical evidence on the distribution of earnings, income and wealth among entrepreneurs in Germany. We document that both earnings and income are more concentrated among entrepreneurs than among workers and describe a large-scale overlapping-generations model that can replicate these findings. As an application, we compute the equilibrium effects of a reform of the German pay-as-you-go pension system in which entrepreneurs must also contribute and receive a pension. We show that in the presence of mobility between workers and entrepreneurs, the expected lifetime utility of all newborn households unanimously declines due to the general equilibrium effects of lower aggregate savings, and welfare losses amount to approximately 5% of total consumption. In addition, the integration of self-employed workers into the social security system in Germany does not help to improve its fiscal sustainability, and only an increase in the retirement age to 70 years will help to finance pensions at the present level beyond the year 2050.
Subjects: 
entrepreneurship
aging
income distribution
overlapping generations
social security
fiscal sustainability
JEL: 
H55
D31
D91
J11
L26
C68
Document Type: 
Working Paper
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