The income of self-employed as entrepreneurs and liberal professions vary over time in a particular way. The aim of this study is to analyze the income dynamics of self-employed, and
employees in Germany with a dynamic panel data estimators. The special interest of the author is on the income dynamic of liberal professions and entrepreneurs and how they differ from employees. To model the dynamics a lagged dependent variable is added to a classic Mincer equation. The resulting problem of endogeneity is encountered by a dynamic panel data estimator following Blundell and Bond. Using this method, the speed of adjustment is estimated based on data from the German Socio-economic Panel of the DIW for the years from 2000 until 2012. The coefficient for the adjustment speed is significantly different from zero for both the self-employed and employees, i.e. the lag endogeneous variable is significant. Overall, entrepreneurs and professionals yield very similar results and have an almost twice as high speed of adjustment than employees.