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

25 Pages Posted: 26 Nov 2006

See all articles by Magnus Lofstrom

Magnus Lofstrom

Public Policy Institute of California; Institute for the Study of Labor (IZA)

Chunbei Wang

University of Texas at Dallas

Date Written: November 2006

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: self-employment, entrepreneurship, Hispanic

JEL Classification: J15, J23

Suggested Citation

Lofstrom, Magnus and Wang, Chunbei, Mexican-Hispanic Self-Employment Entry: The Role of Business Start-Up Constraints (November 2006). IZA Discussion Paper No. 2422. Available at SSRN: https://ssrn.com/abstract=947074

Magnus Lofstrom (Contact Author)

Public Policy Institute of California ( email )

500 Washington Street
Suite 800
San Francisco, CA 94111
United States

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany
+49 228 3894 303 (Phone)
+49 228 3894 210 (Fax)

Chunbei Wang

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083

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