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The heterogeneity of self-employment: The example of Asians in the United States

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  • Lunn, John
  • Steen, Todd P.

Abstract

Self-employment rates differ widely across industries and across racial and ethnic categories. The former is relatively easy for economists to explain while the latter differences are more difficult. Self-employment is rare in industries for which production is characterized by substantial economies of scale. Self-employment is more common in services than in manufacturing, although it is greatest in agriculture. There are also substantial differences in self-employment across countries, with the evidence suggesting an inverse relationship between self-employment and economic development. For the United States, self- employment rates tend to be higher in less densely populated states because self-employment rates are greater when average firm size is smaller (Lunn and Steen, 2000). According to some people, differences in self-employment rates across racial and ethnic categories are due to discrimination. Self-employment rates are higher for whites than other racial/ethnic groups, and are higher for men than for women. The numerous programs initiated by state and local governments to assist minority- and women-owned businesses usually offer discrimination against minorities and women as a rationale for the programs. However, self-employment rates often differ widely across more narrowly defined groups within broader racial or ethnic classifications. Within the United States, there is a relatively large gap between self-employment rates of Mexicans and Cubans, and a larger gap between Koreans and Laotians. Fairlie (1996) reports self-employment rates for Russians of 24.9 percent and 10.5 percent for Belgians. These differences in self-employment rates within broader classifications (Hispanics, Asians, and Europeans) suggest that discrimination may not be the primary cause. In this paper, we examine self-employment rates among various ethnic groups within the broader classification of Asian to illustrate the heterogeneity of the self-employed, and to discuss the implications of this heterogeneity.

Suggested Citation

  • Lunn, John & Steen, Todd P., 2000. "The heterogeneity of self-employment: The example of Asians in the United States," Center for European, Governance and Economic Development Research Discussion Papers 6, University of Goettingen, Department of Economics.
  • Handle: RePEc:zbw:cegedp:6
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    1. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    2. Thomas Dunn & Douglas Holtz-Eakin, 1996. "Financial Capital, Human Capital, and the Transition to Self-Employment:Evidence from Intergenerational Links," NBER Working Papers 5622, National Bureau of Economic Research, Inc.
    3. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    4. Bates, Timothy, 1995. "Self-employment entry across industry groups," Journal of Business Venturing, Elsevier, vol. 10(2), pages 143-156, March.
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