Barriers to Black Entrepreneurship: Implications for Welfare and Aggregate Output over Time

Pedro Bento and Sunju Hwang ()

No 20210324-001, Working Papers from Texas A&M University, Department of Economics

Abstract: The number of black-owned businesses in the U.S. has increased dramatically since the 1980s, even compared to the number of non-black-owned businesses and the rise in black labor-market participation. In 1982 less than 4 percent of black labor-market participants owned businesses, compared to over 14 percent of other participants. By 2012 more than 16 percent of black participants owned businesses while the analogous rate for non-black participants increased to only 19 percent. This and other evidence suggest black entrepreneurs have faced significant barriers to starting and running businesses and these barriers have declined over time. We examine the impact of these trends on aggregate output and welfare. Interpreted through a model of entrepreneurship, declining barriers led to a 2 percent increase in black welfare, a 0.7 increase in output per worker, and a 0.7 decrease in the welfare of other labor-market participants. These impacts are in addition to any gains from declining labor-market barriers.

Keywords: black; minority; distortions; entrepreneurship; business dynamism; misallocation; aggregate productivity; economic growth. (search for similar items in EconPapers)
JEL-codes: E02 E1 J15 J7 O1 O4 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2021-03-24
New Economics Papers: this item is included in nep-dge, nep-ent, nep-fdg, nep-lab and nep-mac
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Related works:
Journal Article: Barriers to black entrepreneurship: Implications for welfare and aggregate output over time (2023)
Working Paper: Barriers to Black Entrepreneurship: Implications for Welfare and Aggregate Output over Time (2021)
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