Who Hires Whom? Entrepreneurial Backgrounds and Labor Market Opportunities

Josh Feng and Xavier Jaravel

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: What are the implications of unequal access to entrepreneurial careers for labor markets? Using data from the U.S. Census and LinkedIn profiles, we document that entrepreneurs are significantly more likely to hire workers from similar social backgrounds (gender, race, age, education, etc.). These effects are quantitatively large across several demographic dimensions. For example, female employee share at female-founded startups is 36.4pp higher after controlling for industry-by-metro area-by-cohort fixed effects, with corresponding estimates of 51.2pp for Blacks, 37.3pp for Hispanics, and 11.3pp for non-college individuals. Large effects are present in high-growth startups, across industries and occupations, and remain stable across new firm cohorts. In addition, we find that these differences persist out to at least 20 years. We use wage data and an AKM research design to untangle whether the relative differences are driven by labor demand or labor supply effects. We find that demand drives the differences: group-specific wage decompositions show that new firms pay higher relative wages to individuals from similar backgrounds to the entrepreneur. Using these estimates, we calibrate a model of entrepreneurship with heterogeneous ability and production functions, and assess the impacts on relative wage from reducing access barriers to entrepreneurship.

Keywords: entrepreneurship; hiring; labor market; production functions (search for similar items in EconPapers)
JEL-codes: D24 J31 L26 (search for similar items in EconPapers)
Date: 2026-07
New Economics Papers: this item is included in nep-bec
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https://www2.census.gov/library/working-papers/2026/adrm/ces/CES-WP-26-45.pdf First version, 2026 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:26-45

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