The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment
Estimates from the Panel Study of Income Dynamics (PSID) indicate that African-American men are one-third as likely to be self-employed as white men.Â The large discrepancy is due to a black transition rate into self-employment that is approximately one half the white rate and a black transition rate out of self-employment that is twice the white rate.Â Using a new variation of the Blinder-Oaxaca decomposition technique, I find that racial differences in asset levels and probabilities of having self-employed fathers explain a large part of the black/white gap in the entry rate, but almost none of the gap in the exit rate.
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