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Families, Human Capital, and Small Business: Evidence from the Characteristics of Business Owners Survey

Author

Listed:
  • Robert W. Fairlie

    (University of California, Santa Cruz, Division of Social Sciences, Department of Economics)

  • Alicia Robb

    (Foundation for Sustainable Development (FSD))

Abstract

Using data from the confidential and restricted-access Characteristics of Business Owners (CBO) Survey, we provide some suggestive evidence on the causes of intergenerational links in business ownership and the related issue of how having a family business background affects small business outcomes. Estimates from the CBO indicate that more than half of all business owners had a self-employed family member prior to starting their business. Conditional on having a self-employed family member, less than 50 percent of small business owners worked in that family member's business. In contrast, estimates from regression models conditioning on business ownership indicate that having a self-employed family member plays only a minor role in determining small business outcomes, whereas the business human capital acquired from prior work experience in a family member's business appears to be very important for business success. Estimates from the CBO also indicate that only 1.6 percent of all small businesses are inherited suggesting that the role of business inheritances in determining intergenerational links in self-employment is limited at best.

Suggested Citation

  • Robert W. Fairlie & Alicia Robb, 2004. "Families, Human Capital, and Small Business: Evidence from the Characteristics of Business Owners Survey," Yale School of Management Working Papers ysm435, Yale School of Management.
    • Handle: RePEc:ysm:somwrk:ysm435
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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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