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

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  • Uwaifo Oyelere, Ruth

    () (Morehouse College)

  • 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.

Suggested Citation

  • Uwaifo Oyelere, Ruth & Belton, Willie, 2008. "The Role of Information and Institutions in Understanding the Black-White Gap in Self-Employment," IZA Discussion Papers 3761, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3761
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    References listed on IDEAS

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    3. Belton, Willie & Uwaifo Oyelere, Ruth, 2008. "The Racial Saving Gap Enigma: Unraveling the Role of Institutions," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 37089, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:

    1. 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).
    2. 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.

    More about this item

    Keywords

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

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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