African Americans’ pursuit of self-employment

Magnus Lofstrom and Timothy Bates

Small Business Economics, 2013, vol. 40, issue 1, 73-86

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. Copyright Springer Science+Business Media, LLC. 2013

Keywords: Self-employment; Entrepreneurship; Entry barriers; African American; J15; J16; L26 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11187-011-9347-2 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: African Americans' Pursuit of Self-Employment (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:40:y:2013:i:1:p:73-86

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2

DOI: 10.1007/s11187-011-9347-2

Access Statistics for this article

Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch

More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().