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This paper studies the entrepreneurial undertaking and economic success of immigrants and natives in Germany, namely the West Germans, the East Germans, the guestworkers, and other immigrants.

The paper studies factors that affect the sorting of individuals into self‐employment and investigate whether the self‐employed fare better than the paid‐employed, and whether self‐employed immigrants fare better than Germans. Employing data from the German Socioeconomic Panel both the probability to choose self‐employment through a probit and the selection adjusted earnings are estimated.

The paper finds that the probability of self‐employment increases significantly with age for all ethnicity groups. More education and a self‐employed father propel self‐employment choices for West Germans only. Immigrants are rather pushed into self‐employment to avoid unemployment; however, they are able to traverse the socioeconomic gap through self‐employment. Except for the East Germans, the self‐employed earn more than their salaried counterparts, and immigrants fare the best, having the highest earnings of all groups. For immigrants, entrepreneurship maybe a way of “making” it in the new country. While self‐employment is a lucrative choice for immigrants, their rates remain low.

This study produces new empirical evidence on the importance of the self‐employment sector in Germany, where individuals fare well and where immigrants can achieve earnings over‐assimilation compared to natives and higher occupational prestige.

Several studies find that there is little sex gap in wages at labor market entry, and that the sex gap in wages emerges (and grows) with time in the labor market. This evidence is consistent with (i) there is little or no sex discrimination in wages at labor market entry, and (ii) the emergence of the sex gap in wages with time in the labor market reflects differences between women and men in human capital investment (and other decisions), with women investing less early in their careers. Indeed, some economists explicitly interpret the evidence this way. We show that this interpretation ignores two fundamental implications of the human capital model, and that differences in investment can complicate the interpretation of both the starting sex gap in wages (or absence of a gap), and the differences in “returns” to experience. We then estimate stylized structural models of human capital investment and wage growth to identify the effects of discrimination (or other sources of a starting pay gap) and differences in human capital investment.

Empirical evidence on the labor market performance of immigrants shows that migrant workers suffer from an initial disadvantage compared to observationally equivalent native workers, but that their wages subsequently tend to increase faster than native earnings. Economists usually explain these phenomena by spot markets for labor and investments into human capital. By contrast, this chapter proposes a contractual model. This alternative has important implications for integration policy, because it suggests investing into the transparency of foreign educational credentials. Also contrasting human capital theory, the model suggests that permanent migrants never earn higher wages than equally skilled temporary migrants.

This chapter uses a college-by-graduate degree fixed effects estimator to evaluate the returns to 19 different graduate degrees for men and women. We find substantial variation across degrees, and evidence that OLS overestimates the returns to degrees with the highest average earnings and underestimates the returns to degrees with the lowest average earnings. Second, we decompose the impacts on earnings into effects on wage rates and effects on hours. For most degrees, the earnings gains come from increased wage rates, though hours play an important role in some degrees, such as medicine, especially for women. Third, we estimate the net present value and internal rate of return for each degree, which account for the time and monetary costs of degrees. Finally, we provide descriptive evidence that satisfaction gains are large for some degrees with smaller economic returns, such as education and humanities degrees, especially for men.

This paper presents the results of an investigation into the relative costs of part‐time and full‐time education at Colleges of Advanced Education. Estimates of the relative net private, social, and institutional costs indicate that the private and social costs of part‐time education may be significantly below those of full‐time study, but that the institutional costs may be higher. However, differential rates of attrition may influence the estimates made, as would the value placed upon the leisure foregone by part‐time students.

A central issue of public policy in relation to employment behaviour, particularly in the United States and Britain since the 1960s, has been the question of how to deal with discrimination against minority groups. The latter may be taken to include women, coloured employees, immigrants, foreign workers, the young and the elderly, but in this paper we concentrate on race and sex discrimination which have tended to receive most attention from both academics and policy‐makers. Further, attention is focused on the USA and Britain, partly because there is more evidence on the workings of equal opportunity legislation in the USA than in any other country, and partly for the reason that developments in Britain appear to mirror those in the USA. Since it is difficult, if not impossible, to isolate the precise extent of discrimination at the macro‐level, on account of variations in personal characteristics and establishment variables, detailed analysis of the operation of local labour markets and individual enterprises and establishments then becomes crucial. Here a feature of recent empirical work has been the emphasis placed on the internal labour market (ILM) and the related concept of the dual labour market (DLM). This is, in fact, highly relevant to equal opportunity legislation not only because it is at the level of the individual organisation or unit of employment that the laws are to be applied but also because, as will be outlined below, the legislation appears to have certain features which are consistent with a dualist interpretation of the operation of the labour market and the emphasis on equality of training and promotion opportunities is most appropriate and significant in the context of a well‐developed internal labour market.

Considers the optimal training decisions of firms and individuals, and provides a number of reasons why there may be underinvestment in the market for training. Reflects on the individual′s decision to invest in training in the context of dynamic labour supply theories. This is combined with a model of the firm′s decision‐making process to provide a “market for training” in which wage‐training‐employment contracts are determined.

The sudden slump in the labour market of the 1990s made it necessary for Switzerland to alter its labour market policy, which from being almost exclusively passive became an active policy. Indeed a lack of suitable qualifications can be considered as one of the main factors prolonging the unemployment of those concerned, in Switzerland. Even so, the policy of relying on massive continuous education and retraining programmes as the most efficient solution to this problem needs to be called into question. For many years a majority of those who now find themselves unemployed neglected the option of seeing to their own continuous education needs. The reasons for this inactivity at the individual level may well lie in the lack of financial incentives. This in turn is the result of a wage structure that is still very much linked to years of service, with education‐related differences in wages being very slight.

Dissatisfaction with the current federal tax system is fostering serious interest in several tax reform plans such as a value-added tax (VAT), a flat tax, and a national retail sales tax. Recently, one of the former Republican presidential candidates, Herman Cain, initiated a 999 tax plan. As illustrated on Cain’s official website, the 999 plan intends to replace current federal taxes with a 9% business flat tax, a 9% individual flat tax, and a 9% national sales tax. We examine the distributional effects of the 999 tax plan, as well as the current system it intends to replace, under both annual income and lifetime income approaches. Global measures of progressivity and bootstrap-t confidence intervals suggest that the current federal tax system is progressive while Cain’s 999 tax plan is regressive under the annual income approach. Under the lifetime income approach, both the current federal tax system and Cain’s 999 tax plan show progressivity. However, the current federal tax system is more progressive. The findings in this study suggest that Cain’s 999 tax plan should be considered more seriously and further analysis of the 999 tax plan is warranted.