Intergenerational Mobility and Income Effects for Entrepreneurial Activity in Mexico

31 Pages Posted: 4 Oct 2012

See all articles by Viviana Velez-Grajales

Viviana Velez-Grajales

Inter-American Development Bank (IDB)

Roberto Velez-Grajales

affiliation not provided to SSRN

Date Written: July 2012

Abstract

This paper uses the Mexican Social Mobility Survey 2006 to analyze intergenerational social mobility as it relates to entrepreneurial activity. First, the paper analyzes whether entrepreneurs experience greater upward social mobility than self-employed workers or employees. Second, probit models are estimated to identify whether predetermined characteristics are the main determinants of the decision to become an entrepreneur. Third, using the propensity score matching method (PSM), the paper estimates the effect of entrepreneurial activity on income. Results show that entrepreneurs have more options for upward social mobility. For entrepreneurs with low-income parents, it is more difficult to reach the top of the socioeconomic distribution compared to those with middle- or upper-class parents. Second, the probability of becoming an entrepreneur increases when the respondent’s father was an entrepreneur. Finally, the mean effect of entrepreneurial activity on income is positive, and is greater for those whose parents belonged to the extreme ends of the socioeconomic distribution.

JEL Classification: C21, J62, L26

Suggested Citation

Velez-Grajales, Viviana and Velez-Grajales, Roberto, Intergenerational Mobility and Income Effects for Entrepreneurial Activity in Mexico (July 2012). IDB Working Paper No. IDB-WP-320. Available at SSRN: https://ssrn.com/abstract=2156790 or http://dx.doi.org/10.2139/ssrn.2156790

Viviana Velez-Grajales (Contact Author)

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States
202-623-3686 (Phone)

Roberto Velez-Grajales

affiliation not provided to SSRN

No Address Available

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