Using a large data set for Germany, we show that both the raw and the unexplained gender earnings gap are higher in self-employment than in paid employment. Applying an Oaxaca-Blinder decomposition, more than a quarter of the difference in monthly self-employment earnings can be traced back to...

Most self-employed would apparently earn higher earnings if they were working in paid employment. One explanation for this “return-to-entrepreneur-ship puzzle” could be that entrepreneurship entails substantial non-monetary bene-fits, such as autonomy, flexibility, and task variety....