Ethnic and Racial Entrepreneurship
A Study of Historical and Contemporary Differences

Robert W. Fairlie, Garland Publishing Inc., 1996

The propensity for business ownership differs markedly across ethnic and racial groups in the United States. Data from the 1990 Census of Population demonstrate that ethnic groups, such as Greeks, Koreans and Russians, have self-employment rates that are more than five times higher than some disadvantaged ethnic groups, such as African-Americans, Laotians and Puerto Ricans. This study documents differences in self-employment among these and 54 additional ethnic/racial groups in the United States. Several theories from sociology and economics explaining these patterns of entrepreneurship are tested. Because African-Americans represent the largest economically disadvantaged group in the United States, the remainder of this study examines the causes of their relative absence among business owners. Using recent survey data which follow a large group of individuals for 22 years, this study investigates the reasons why blacks are less likely to enter and are more likely to exit from self-employment than whites. The roles that assets, education levels, parental business ownership, and past self-employment experience play in explaining these racial differences are examined. Using historical Census data, this study finds that from 1910 to 1990 the African-American self-employment rate remained constant at approximately one-third the white rate. This finding is surprising in light of the significant gains which blacks made in education and earnings during this period. The potential causes of these trends in racial self-employment are analyzed.

ISBN 0-8153-2625-4