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- Title
African Americans' pursuit of self-employment.
- Authors
Lofstrom, Magnus; Bates, Timothy
- Abstract
We examine causes of black/white gaps in self-employment entry rates in the United States by recognizing that industry context heavily shapes impacts of owner resource endowments on the likelihood of successful entry. Barriers to entry, briefly stated, are high in some lines of business and low in others. We therefore proceed by explaining self-employment entry into separate subgroups of high- and low-barrier industries. Higher entry rates typifying whites, relative to African Americans, are traditionally interpreted as reflections of the former group's greater personal wealth and human-capital resources. This consensus view, however, is simplistic: personal wealth holdings have no positive explanatory power for predicting entry into low-barrier lines of business. Our findings demonstrate, furthermore, that high educational attainment is a strong, positive predictor of entry into high-barrier fields, but not into low-barrier industries. Because industry context indeed shapes entry patterns, 'one-size-fits-all' econometric models commonly used to predict entry into self-employment fall short.
- Subjects
UNITED States; SELF-employment; AFRICAN Americans; ECONOMIC impact; ENDOWMENTS; HUMAN capital; WEALTH effect (Economics); ECONOMETRIC models
- Publication
Small Business Economics, 2013, Vol 40, Issue 1, p73
- ISSN
0921-898X
- Publication type
Article
- DOI
10.1007/s11187-011-9347-2