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Does racial prejudice affect black entrepreneurship?: evidence exploiting spatial differences in prejudicial attitudes

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  • Nolan Kopkin

Abstract

This article explores the relationship between racial prejudice towards blacks and the black-white self-employment rate gap and provides the first direct empirical evidence that racial prejudice negatively impacts black self-employment, particularly in high start-up cost industries. To perform this analysis, I construct a measure of prejudicial attitudes using responses from the General Social Survey and estimate the relationship between self-employment and this index using the American Community Survey. I find that an amount of prejudice equal to the difference in least and most prejudiced census divisions increases the black-white self-employment rate gap in high start-up cost industries by 10.4–16.8%, depending upon whether parental self-employment is controlled for, and represents the entire impact of racial prejudice on the black-white self-employment rate gap. Additionally, racial prejudice widens the black-white self-employment income gap by between 6.4% and 8.2% in my full specification, dependent upon how income is measured. Evidence indicates that racial prejudice is causing blacks difficulty in financing their businesses. The results presented are robust to various modelling and data assumptions.

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  • Nolan Kopkin, 2017. "Does racial prejudice affect black entrepreneurship?: evidence exploiting spatial differences in prejudicial attitudes," Applied Economics, Taylor & Francis Journals, vol. 49(31), pages 3045-3066, July.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:31:p:3045-3066
    DOI: 10.1080/00036846.2016.1254336
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    1. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, December.
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    Cited by:

    1. Nolan Kopkin, 2018. "The conditional spatial correlations between racial prejudice and racial disparities in the market for home loans," Urban Studies, Urban Studies Journal Limited, vol. 55(16), pages 3596-3614, December.
    2. Vincent E. Mangum, 2020. "What Does Political Economy Tell Us About the Dearth of Black Entrepreneurs?," The American Economist, Sage Publications, vol. 65(1), pages 131-143, March.

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