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Recent Trends in Ethnic and Racial Business Ownership

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  • Fairlie, Robert

Abstract

Using Current Population Survey (CPS) microdata, I examine trends and the causes of the trends from1979 to 1998 in entrepreneurship 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

Paper provided by Department of Economics, UC Santa Cruz in its series Santa Cruz Department of Economics, Working Paper Series with number qt1b44c0mk.

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Date of creation: 15 May 2014
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Handle: RePEc:cdl:ucscec:qt1b44c0mk

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Keywords: Business; entrepreneurship; inequality; race; business ownership; self-employment; labor;

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References

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  1. 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, University of Chicago Press, vol. 17(1), pages 80-108, January.
  2. Moore, Robert L, 1983. "Employer Discrimination: Evidence from Self-Employed Workers," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 65(3), pages 496-501, August.
  3. Michael Hout & Harvey Rosen, 2000. "Self-Employment, Family Background, and Race," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 35(4), pages 670-692.
  4. Blau, Francine D & Graham, John W, 1990. "Black-White Differences in Wealth and Asset Composition," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(2), pages 321-39, May.
  5. Douglas Holtz-Eakin & David Joulfaian & Harvey Rosen, 1992. "Entrepreneurial Decisions and Liquidity Constraints," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 679, Princeton University, Department of Economics, Industrial Relations Section..
  6. George J. Borjas & Stephen G. Bronars, 1988. "Consumer Discrimination and Self-Employment," NBER Working Papers, National Bureau of Economic Research, Inc 2627, National Bureau of Economic Research, Inc.
  7. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers, University of Oxford, Department of Economics 99125, University of Oxford, Department of Economics.
  8. Timothy Bates & Robert McGuckin, 1990. "The Characteristics of Business Owners Data Base," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 25(4), pages 736-751.
  9. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 519-35, June.
  10. Douglas Holtz-Eakin & David Joulfaian & Harvey Rosen, 1993. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 698, Princeton University, Department of Economics, Industrial Relations Section..
  11. 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, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  12. Robert W. Fairlie & Bruce D. Meyer, 1996. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 31(4), pages 757-793.
  13. Herb J. Schuetze, . "Taxes, Economic Conditions And Recent Trends in Male Self-Employment: A Canada-U.S. Comparison," Canadian International Labour Network Working Papers, McMaster University 11, McMaster University.
  14. 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, Springer, vol. 18(2), pages 25-42, September.
  15. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(4), pages 808-27, August.
  16. Boden, Richard J & Nucci, Alfred R, 1997. " Counting the Self-Employed Using Household and Business Sample Data," Small Business Economics, Springer, Springer, vol. 9(5), pages 427-36, October.
  17. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 72(4), pages 551-59, November.
  18. Menchik, Paul L & Jianakoplos, Nancy Ammon, 1997. "Black-White Wealth Inequality: Is Inheritance the Reason?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 35(2), pages 428-42, April.
  19. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 27(2), pages 519-64, June.
  20. Bruce D. Meyer, 1990. "Why Are There So Few Black Entrepreneurs?," NBER Working Papers, National Bureau of Economic Research, Inc 3537, National Bureau of Economic Research, Inc.
  21. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 21(4), pages 485-506.
  22. 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, American Economic Association, vol. 84(2), pages 108-13, May.
  23. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers, National Bureau of Economic Research, Inc 1942, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. 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, Elsevier, vol. 37(5), pages 1999-2019, October.
  2. Philipp Koellinger & Maria Minniti & Christian Schade, 2008. "Seeing the World with Different Eyes," Tinbergen Institute Discussion Papers, Tinbergen Institute 08-035/3, Tinbergen Institute, revised 11 Mar 2011.
  3. Ken Clark & Stephen Drinkwater, 2010. "Patterns of ethnic self-employment in time and space: evidence from British Census microdata," Small Business Economics, Springer, Springer, vol. 34(3), pages 323-338, April.
  4. P. Köllinger & M. Minniti, 2006. "Not for Lack of Trying: American Entrepreneurship in Black and White," Small Business Economics, Springer, Springer, vol. 27(1), pages 59-79, August.
  5. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper, University Library of Munich, Germany 48403, University Library of Munich, Germany.
  6. Parker, Simon C., 2008. "Entrepreneurship among married couples in the United States: A simultaneous probit approach," Labour Economics, Elsevier, Elsevier, vol. 15(3), pages 459-481, June.
  7. Gregory Fairchild, 2009. "Racial segregation in the public schools and adult labor market outcomes: the case of black Americans," Small Business Economics, Springer, Springer, vol. 33(4), pages 467-484, December.
  8. Ruth Oyelere & Willie Belton, 2013. "Black–White gap in self-employment. Does intra-race heterogeneity exist?," Small Business Economics, Springer, Springer, vol. 41(1), pages 25-39, June.
  9. Harris, Jared D. & Sapienza, Harry J. & Bowie, Norman E., 2009. "Ethics and entrepreneurship," Journal of Business Venturing, Elsevier, Elsevier, vol. 24(5), pages 407-418, September.

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