The Absence of the African-American-Owned Business: An Analysis of the Dynamics of Self-Employment

JOURNAL OF LABOR ECONOMICS

Posted: 15 Oct 1997

See all articles by Robert W. Fairlie

Robert W. Fairlie

University of California, Santa Cruz - Department of Economics

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Abstract

Estimates from the Panel Study of Income Dynamics (PSID) indicate that African-American men are one-third as likely to be self-employed as white men in the United States. The large discrepancy is due to a black transition rate into self- employment which is approximately one-half the white rate and a black transition rate out of self-employment which is twice the white rate. Using a nonstandard decomposition technique, I find that racial differences in asset levels, probabilities of having self-employed fathers, and past self-employment experience explain part of the large black/white gap in the entry rate. Of these and other potential factors, only racial difference in past self-employment experience explains a large part of the exit rate gap. Finally, these factors which contribute to the racial gaps in the transition rates are important causes of the black/white gap in the self-employment rate.

JEL Classification: J23, J15

Suggested Citation

Fairlie, Robert W., The Absence of the African-American-Owned Business: An Analysis of the Dynamics of Self-Employment. JOURNAL OF LABOR ECONOMICS. Available at SSRN: https://ssrn.com/abstract=10825

Robert W. Fairlie (Contact Author)

University of California, Santa Cruz - Department of Economics ( email )

Department of Economics
Engineering 2 Bldg.
Santa Cruz, CA 95064
United States
831-459-3332 (Phone)

HOME PAGE: http://econ.ucsc.edu/~fairlie/

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