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Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital

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Author Info
Robert W. Fairlie
Alicia M. Robb
Abstract

Using confidential microdata from the Characteristics of Business Owners survey, we examine why African American–owned businesses lag substantially behind white-owned businesses in sales, profits, employment, and survival. Black business owners are much less likely than white owners to have had a self-employed family member owner prior to starting their business and less likely to have worked in that family member’s business. Using a nonlinear decomposition technique, we find that the lack of prior work experience in a family business among black business owners, perhaps by limiting their acquisition of general and specific business human capital, negatively affects black business outcomes.

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File URL: http://www.journals.uchicago.edu/cgi-bin/resolve?id=doi:10.1086/510763
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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 25 (2007)
Issue (Month): ()
Pages: 289-323
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ucp:jlabec:v:25:y:2007:p:289-323

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  1. Alicia M. Robb & Robert W. Fairlie, 2008. "Determinants of Business Success: An Examination of Asian-Owned Businesses in the United States," CEPR Discussion Papers 569, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  2. Uwaifo Oyelere, Ruth & Belton, Willie, 2008. "The Role of Information and Institutions in Understanding the Black-White Gap in Self-Employment," IZA Discussion Papers 3761, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Silvia Ardagna & Annamaria Lusardi, 2008. "Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints," NBER Working Papers 14012, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Silvia Ardagna & Annamaria Lusardi, 2009. "Where does regulation hurt? Evidence from new businesses across countries," NBER Working Papers 14747, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Silvia Ardagna & Annamaria Lusardi, 2008. "Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints," NBER Chapters, in: International Differences in Entrepreneurship National Bureau of Economic Research, Inc. [Downloadable!]
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