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Open Access Publications from the University of California

Ethnic and Racial Self-Employment Differences and Possible Explanations

  • Author(s): Fairlie, Robert
  • et al.

We show that entrepreneurship rates differ substantially across 60 ethnic and racial groups in the United States.  These differences exist within broad combinations of groups such as Asians and Hispanics, and are almost as great after regression controls, including age, education, immigrant status, and time in the country.  We then provide evidence on a number of theories of entrepreneurship.  An ethnic/racial group's self-employment rate is positively associated with the difference between average self-employment and wage/salary earnings for that group.  Ethnic/racial groups which immigrate from countries with high business ownership rates do not have high business ownership rates in the U.S.  Finally, we find that the more advantaged ethnic/racial groups, measured by wage/salary earnings, self-employment earnings, and unearned income, and not the more disadvantaged groups, have the highest self-employment rates.

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