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Measuring the headwinds to Black self-employment

Author

Listed:
  • Akyol, Ahmet
  • Athreya, Kartik
  • Farbman, Simon
  • Neelakantan, Urvi

Abstract

In the US, Black self-employment rates are roughly half the overall rate and half of that predicted by a standard life cycle model of occupational choice. Even the total elimination of credit access from the model leaves predicted Black self-employment 50% above actual rates. Given that the literature has documented a variety of barriers to self-employment, it is useful to have a measure of their total effect. The contribution of this paper is to demonstrate that a surprisingly simple measure — a constant 20% wedge on self-employment productivity — quantitatively captures the total effect of these headwinds over the entire life-cycle.

Suggested Citation

  • Akyol, Ahmet & Athreya, Kartik & Farbman, Simon & Neelakantan, Urvi, 2026. "Measuring the headwinds to Black self-employment," Economics Letters, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:ecolet:v:260:y:2026:i:c:s0165176525006251
    DOI: 10.1016/j.econlet.2025.112788
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    Keywords

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    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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