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Recent Trends in Ethnic and Racial Business Ownership

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  • Robert W. Fairlie

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Abstract

Using Current Population Survey (CPS) microdata, I examine trends and the causes of the trends from 1979 to 1998 in business ownership among several ethnic/racial groups in the United States. I find rapid growth rates for the number of self-employed blacks, Hispanics, Asians and Native Americans relative to whites over the past decade or two. I find that the rapid growth rates were primarily due to expansions in the labor force for these groups. With the exception of female rates in the 1980s, trends in business ownership rates were fairly flat over the past two decades. There were, however, important differences across groups in changes in self-employment rates over the past decade or two. I use a dynamic decomposition technique to explore the causes of these differential trends and find some interesting patterns. For example, I find that increasing levels of education and relative declines in the age distribution of the workforce for some minority groups contributed to increasing racial gaps in self-employment.

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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 23 (2004)
Issue (Month): 3 (October)
Pages: 203-218

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Handle: RePEc:kap:sbusec:v:23:y:2004:i:3:p:203-218

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Web page: http://www.springerlink.com/link.asp?id=100338

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References

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  1. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers 1942, National Bureau of Economic Research, Inc.
  2. Francine D. Blau & John W. Graham, 1990. "Black-White Differences in Wealth and Asset Composition," NBER Working Papers 2898, National Bureau of Economic Research, Inc.
  3. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-35, June.
  4. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  5. Moore, Robert L, 1983. "Employer Discrimination: Evidence from Self-Employed Workers," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 496-501, August.
  6. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
  7. Herb J. Schuetze, . "Taxes, Economic Conditions And Recent Trends in Male Self-Employment: A Canada-U.S. Comparison," Canadian International Labour Network Working Papers 11, McMaster University.
  8. Fairlie, Robert W, 1999. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 80-108, January.
  9. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  10. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-59, November.
  11. Timothy Bates & Robert McGuckin, 1990. "The Characteristics of Business Owners Data Base," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 736-751.
  12. Bruce D. Meyer, 1990. "Why Are There So Few Black Entrepreneurs?," NBER Working Papers 3537, National Bureau of Economic Research, Inc.
  13. Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1994. "Entrepreneurial Decisions and Liquidity Constraints," NBER Working Papers 4526, National Bureau of Economic Research, Inc.
  14. Boden, Richard J & Nucci, Alfred R, 1997. " Counting the Self-Employed Using Household and Business Sample Data," Small Business Economics, Springer, vol. 9(5), pages 427-36, October.
  15. Michael Hout & Harvey S. Rosen, 1999. "Self-Employment, Family Background, and Race," NBER Working Papers 7344, National Bureau of Economic Research, Inc.
  16. Fairlie, Robert, 2014. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Santa Cruz Department of Economics, Working Paper Series qt24p7v6gc, Department of Economics, UC Santa Cruz.
  17. Timothy Bates, 1989. "The changing nature of minority business: A comparative analysis of asian, nonminority, and black-owned businesses," The Review of Black Political Economy, Springer, vol. 18(2), pages 25-42, September.
  18. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
  19. Menchik, Paul L & Jianakoplos, Nancy Ammon, 1997. "Black-White Wealth Inequality: Is Inheritance the Reason?," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 428-42, April.
  20. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
  21. Devine, Theresa J, 1994. "Changes in Wage-and-Salary Returns to Skill and the Recent Rise in Female Self-Employment," American Economic Review, American Economic Association, vol. 84(2), pages 108-13, May.
  22. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, vol. 27(2), pages 519-64, June.
  23. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
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Citations

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Cited by:
  1. Parker, Simon C., 2008. "Entrepreneurship among married couples in the United States: A simultaneous probit approach," Labour Economics, Elsevier, vol. 15(3), pages 459-481, June.
  2. P. Köllinger & M. Minniti, 2006. "Not for Lack of Trying: American Entrepreneurship in Black and White," Small Business Economics, Springer, vol. 27(1), pages 59-79, August.
  3. Gregory Fairchild, 2009. "Racial segregation in the public schools and adult labor market outcomes: the case of black Americans," Small Business Economics, Springer, vol. 33(4), pages 467-484, December.
  4. Ruth Oyelere & Willie Belton, 2013. "Black–White gap in self-employment. Does intra-race heterogeneity exist?," Small Business Economics, Springer, vol. 41(1), pages 25-39, June.
  5. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper 48403, University Library of Munich, Germany.
  6. Bogan, Vicki & Darity Jr., William, 2008. "Culture and entrepreneurship? African American and immigrant self-employment in the United States," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 1999-2019, October.
  7. repec:dgr:uvatin:2008035 is not listed on IDEAS
  8. Harris, Jared D. & Sapienza, Harry J. & Bowie, Norman E., 2009. "Ethics and entrepreneurship," Journal of Business Venturing, Elsevier, vol. 24(5), pages 407-418, September.
  9. Ken Clark & Stephen Drinkwater, 2010. "Patterns of ethnic self-employment in time and space: evidence from British Census microdata," Small Business Economics, Springer, vol. 34(3), pages 323-338, April.

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