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The Role of Information and Institutions in Understanding the Black-White Gap in Self-Employment

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Author Info

  • Uwaifo Oyelere, Ruth

    ()
    (Emory University)

  • Belton, Willie

    ()
    (Georgia Institute of Technology)

Abstract

It has been well documented in the literature that ethnicity matters significantly in the determination of self-employment rates. In particular, African-American self-employment rates lag far behind rates for other racial groups. Similarly, the literature also provides evidence of the long lived nature of institutions and the link between institutions and decision making. After controlling for the appropriate factors that can lead to self-employment differentials, we provide an explanation for the self-employment gap that still exists between African-Americans and White Americans. We focus on the important role of repeated negative institutional shocks and how such shocks influence the development of an information matrix as well as the transmission of information across time and generations. We show that African-Americans who were less likely to be influenced by negative institutional shocks and the information stock created from these experiences, have similar self-employment rates to comparably situated White Americans.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3761.

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Length: 38 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3761

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Keywords: African-American; institutions; information; self-employment;

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References

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  1. David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 1998. "Discrimination in the Small Business Credit Market," NBER Working Papers 6840, National Bureau of Economic Research, Inc.
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  4. Lofstrom, Magnus & Bates, Timothy, 2007. "African Americans' Pursuit of Self-Employment," IZA Discussion Papers 3156, Institute for the Study of Labor (IZA).
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  6. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," NBER Working Papers 8460, National Bureau of Economic Research, Inc.
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  16. 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.
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Cited by:
  1. Christian Busch & Andrea Lassmann, 2010. "From Rags to Riches: How Robust is the Influence of Culture on Entrepreneurial Activity?," KOF Working papers 10-267, KOF Swiss Economic Institute, ETH Zurich.
  2. Uwaifo Oyelere, Ruth & Belton, Willie, 2010. "Black-White Gap in Self-Employment in the U.S.: Do Cohort and Within Race Differences Exist?," IZA Discussion Papers 5071, Institute for the Study of Labor (IZA).

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