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Nascent Entrepreneurship and Race: Evidence from the GATE Experiment

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  • Marios Michaelides

Abstract

We examine white-black disparities in the labor market outcomes of nascent entrepreneurs using data from Project GATE, an experimental-design entrepreneurship training program. Findings show that white nascent entrepreneurs who applied for the program were more successful than their black peers in starting a business, becoming self-employed, and achieving high earnings. These disparities were largely because whites were more likely to have access to start-up financing and – to a lesser extent – because whites had more human capital and business background. The program was found effective in helping both white and black nascent entrepreneurs to start a business and become self-employed, but there is limited evidence that it reduced white-black entrepreneurship gaps.

Suggested Citation

  • Marios Michaelides, 2017. "Nascent Entrepreneurship and Race: Evidence from the GATE Experiment," University of Cyprus Working Papers in Economics 02-2017, University of Cyprus Department of Economics.
  • Handle: RePEc:ucy:cypeua:02-2017
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    File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/02-17.pdf
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    References listed on IDEAS

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    1. Robert W. Fairlie & Dean Karlan & Jonathan Zinman, 2015. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 125-161, May.
    2. 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, January.
    3. Robert W. Fairlie & Bruce D. Meyer, 1996. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 757-793.
    4. Fairlie, Robert W, 1999. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 80-108, January.
    5. Erik Hurst & Annamaria Lusardi, 2004. "Liquidity Constraints, Household Wealth, and Entrepreneurship," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 319-347, April.
    6. Elizabeth Asiedu & James A. Freeman & Akwasi Nti-Addae, 2012. "Access to Credit by Small Businesses: How Relevant Are Race, Ethnicity, and Gender?," American Economic Review, American Economic Association, vol. 102(3), pages 532-537, May.
    7. David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 2003. "Discrimination in the Small-Business Credit Market," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 930-943, November.
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    10. repec:mpr:mprres:5464 is not listed on IDEAS
    11. Michaelides, Marios & Benus, Jacob, 2012. "Are self-employment training programs effective? Evidence from Project GATE," Labour Economics, Elsevier, vol. 19(5), pages 695-705.
    12. Glocker, Daniela & Steiner, Viktor, 2007. "Self-Employment: A Way to End Unemployment? Empirical Evidence from German Pseudo-Panel Data," IZA Discussion Papers 2561, Institute for the Study of Labor (IZA).
    13. Paul D. Reynolds & Nancy M. Carter & William B. Gartner & Patricia G. Greene, 2004. "The Prevalence of Nascent Entrepreneurs in the United States: Evidence from the Panel Study of Entrepreneurial Dynamics," Small Business Economics, Springer, vol. 23(4), pages 263-284, November.
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    15. Jeanne Bellotti & Sheena McConnell & Jacob Benus, "undated". "Growing America Through Entrepreneurship," Mathematica Policy Research Reports d3bbbcef77fe49cb988c23d84, Mathematica Policy Research.
    16. Magnus Lofstrom & Timothy Bates, 2013. "African Americans’ pursuit of self-employment," Small Business Economics, Springer, vol. 40(1), pages 73-86, January.
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    More about this item

    Keywords

    Entrepreneurship; small business; minority entrepreneurship; entrepreneurship entry; human capital; business background; start-up financing; entrepreneurship training;

    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
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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