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The impact of labour market regulations on (potential) entrepreneurs: the case of Germany


Moog, P; Backes-Gellner, U (2009). The impact of labour market regulations on (potential) entrepreneurs: the case of Germany. International Journal of Entrepreneurship and Innovation Management, 10(1):53-70.

Abstract

This paper explores the impact of German labour market regulations on the willingness of labour market entrants to start their own business. We study the legal situation, the actual and the perceived constraints imposed on businesses as well as the actual flexibility available of start-ups. We find strong evidence that labour market regulations are often misperceived in Germany. Furthermore, these misperceptions distort the willingness to become selfemployed. Start-ups are de jure hardly affected by labour market regulations because of a large number of exemptions. They are able to use a number of flexibility measures and thereby avoid regulatory restrictions. However, perceptions are quite the opposite, particularly in legal areas with high media coverage. This leads to a strong reluctance of labour market entrants to consider a start-up. Thus, measures aiming at increasing entrepreneurship should place strong emphasis on accurate knowledge of regulatory constraints and particularly in Germany, on less sceptical media coverage.

This paper explores the impact of German labour market regulations on the willingness of labour market entrants to start their own business. We study the legal situation, the actual and the perceived constraints imposed on businesses as well as the actual flexibility available of start-ups. We find strong evidence that labour market regulations are often misperceived in Germany. Furthermore, these misperceptions distort the willingness to become selfemployed. Start-ups are de jure hardly affected by labour market regulations because of a large number of exemptions. They are able to use a number of flexibility measures and thereby avoid regulatory restrictions. However, perceptions are quite the opposite, particularly in legal areas with high media coverage. This leads to a strong reluctance of labour market entrants to consider a start-up. Thus, measures aiming at increasing entrepreneurship should place strong emphasis on accurate knowledge of regulatory constraints and particularly in Germany, on less sceptical media coverage.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:2009
Deposited On:03 Nov 2009 10:30
Last Modified:05 Apr 2016 13:31
Publisher:Inderscience
ISSN:1368-275X
Publisher DOI:https://doi.org/10.1504/IJEIM.2009.024674
Related URLs:http://www.inderscience.com/search/index.php?action=record&rec_id=24674&prevQuery=&ps=10&m=or (Publisher)

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