Affiliation:
1. Friedrich Schiller University Jena, Germany
2. University of Groningen, The Netherlands
Abstract
We investigate how self-employment in East Germany was impacted by 40 years of Soviet-style communism and the subsequent shock transition to a market economic system. To this end, we compare self-employment in East and West Germany after reunification with self-employment before the separation of Germany after World War II. Our results show that the strict anti-entrepreneurial policies prevalent during the Soviet regime do not have a long-run negative effect on self-employment in East Germany. Quite to the contrary, self-employment in East Germany today is higher than before German separation. This finding cannot be explained by necessity self-employment. Our analysis suggests that current differences in self-employment between East and West Germany are pre-dominantly a result of the sudden shock transformation that occurred with reunification, rather than the outcome of four decades of anti-entrepreneurial policies and ideology.
Funder
German Federal Ministry of Education and Research
Subject
Economics and Econometrics,Business and International Management
Cited by
9 articles.
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