Table 4 Definition of the variables

Gender (male)

Sex equals one if the individual is male. Source: Employment History

Age

Age of the business founder at the beginning of the self-employment episode. Source: Employment History

Schooling (> = high school)

Schooling equals upper secondary school leaving certificate (Germany: ‘Abitur’ or ‘Fachabitur’) or higher. Source: Job Search Register

Academic degree

The founder holds an academic degree or diploma (university or college). Source: Job Search Register

Master craftsman/foreman

The founder worked as a master craftsman or foreman (occupational status) in his or her last employment episode before starting the business. Employment episodes with a daily income lower than 5 euros or lasting less than 60 days (valid employment episode) are excluded. Source: Employment History

Management

The founder worked in a management position in the last employment episode before starting the business. Source: Job Search Register

Commercial background

The founder is experienced and (formally) trained in a commercial occupation. Source: Job Search Register (apprenticeship information); Employment History (using the two-digit classification of a selected set of occupations; experience)

Short unemployment

The unemployment duration before setting up the business is less than 3.5 months (difference between last employment and beginning of the supported episode of self-employment; missing values are imputed). Source: Employment History

Number job changes

Number of distinct occupations classified using the two-digit classification during the last two years before starting the business. Source: Employment History

Marginal part-time employment

Founder worked in a marginal part-time job during the last valid employment episode before setting up the business. Source: Employment History

Wage premium

Identifies whether a founder earned 1.66 times more than the expected monthly wage in the last valid employment episode. The expected income is a regressed function of the income and a selected set of covariates (e.g. age, schooling, job changes, gender, occupational status, size of the establishment) conditional on the type of occupation and part- or full-time status. Source: Employment History

Size of establishment/small business

Size of the establishment: statistical mode of the number of employees in the establishments during the last five years before setting up the business. Only the employment records that last for more than 3 months with an income greater than zero are included. Source: Establishment History Panel.

Small Business: The founder has usually worked (modus of the last five years) in establishments with less than 20 employees. Source: Establishment History Panel

Unemployment rate (UER)

Monthly unemployment rate of the local labor market district. This information is merged with the micro data after splitting the dataset into three-month periods. Berlin is treated as one region (unweighted average). Source: Employment Statistics

Unemployment index

Time-varying covariate that covers a normalized unemployment rate relative to the starting point (index = UER*100/UER). Source: Employment Statistics

Variation index

Captures the variation of the monthly unemployment rate for each local labor market district. The index relates to the square root of the squared mean error of a time series estimation. Source: Employment Statistics

Share (%) of vanishing establishments (local firm hazard)

Identifies the share of establishments that are found in t-1 but do not exist in t in the local labor market district. Source: Establishment History Panel

Cohort

Represents the year in which the founder set up the business. Source: Participants-in-Measures History File

Profession/occupation

Distinguishes seven clusters of occupations based on a two-digit job classification related to the last valid employment episode. Source: Employment History

Exit

Equals one if there is an episode that is not-self-employment after starting the business (beginning of the support). Source: all sources of the IEB. The identification distinguishes between (a) employment (dependent employment with notification to the social security system), (b) unemployment (with or without unemployment benefits) or participation in an employment or training measure, and (c) other (e.g. marginal part-time employment). Before identifying these spells, the data set was reorganized to merge different types of spells

Duration of self-employment

The duration of self-employment is the difference between the start date of the support (start-up of the business) and the date of the first episode that was not-self-employment after starting the business. Censoring refers to 31 Dec. 2005