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Entrepreneur Gap


Frontier -- Trends

Entrepreneur Gap

About 15% of working white Americans are self-employed, compared with 6% of working African Americans. That racial gap has baffled researchers for years. In a new working paper for the National Bureau of Economic Research, sociologist Michael Hout of the University of California at Berkeley and economist Harvey S. Rosen of Princeton University admit they're not getting much closer to the answer.

One factor behind the discrepancy is that white families are richer, on average. Also, whites are more likely to come from two-parent families, which produce more entrepreneurs. But even after taking those factors into account, the authors note, blacks are still less likely than whites to be self-employed.

You could blame the disparity on racism or the fear of discrimination. On the other hand, says Rosen, you could also argue that self-employment is a way to overcome inequities. The authors conclude: "We are still missing some important pieces to the puzzle of low rates of self-employment among blacks."By Peter Coy


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