Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263499 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15283
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
synthetic control method
solo self-employment
minimum wages
JEL: 
J21
J31
J38
J08
Document Type: 
Working Paper

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