Mexican-Hispanic Self-Employment Entry: The Role of Business Start-Up Constraints

Magnus Lofstrom and Chunbei Wang

No 2422, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines causes of the low self-employment rates among Mexican-Hispanics by studying self-employment entry utilizing the 1996 panel of the Survey of Income and Program Participation (SIPP). The data show that Mexican-Hispanics are less likely to be self-employed as well as entering self-employment, relative to non-Hispanic whites. Importantly, we analyze self-employment by recognizing heterogeneity in business ownership across industries and show that a classification of firms by human and financial capital “intensiveness”, or entry barriers, is effective in explaining differences in entrepreneurship across ethnic groups. We show that the lower self-employment entry rates among Mexican-Hispanics are due to lower entry rates into business ownership of firms in relatively high-barrier industries. In fact, Hispanics are more likely to start-up a business in a low-barrier industry than whites.

Keywords: Hispanic; entrepreneurship; self-employment (search for similar items in EconPapers)
JEL-codes: J15 J23 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2006-11
New Economics Papers: this item is included in nep-ent
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Citations: View citations in EconPapers (6)

Published - published in: Annals of the American Academy of Political and Social Science, 2007, 613 (1), 32-46

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