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Title: From Rags to Riches: Does Culture Affect Entrepreneurial Activity?

Citation Type: Miscellaneous

Publication Year: 2009

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Abstract: Entrepreneurial activity diers substantially across countries. Whilecultural dierences across countries have often been proposed as explana-tions, measuring a country's cultural characteristics suers from variousproblems. This paper oers new evidence on the relative importance ofthe cultural determinants of economic activity. We test the hypothe-sis that cultural factors inuence entrepreneurial behavior. To achievethis, we look at dierences in self-employment rates between immigrantgroups within the same market, which allows holding constant the insti-tutional environment. Using U.S. Census data for the year 2000, we ndsignicant dierences in the propensity to become self-employed acrossimmigrants from 148 countries which is in line with previous ndings.However, previous studies could not relate self-employment shares to self-employment shares in the immigrants' home-countries which contradicts acultural explanation. We improve over the existing literature by addition-ally accounting for determinants of self-employment in the immigrants'home countries. We nd evidence of a signicantly positive relationshipbetween self-employment rates of U.S. immigrants and entrepreneurial ac-tivity in their respective countries of origin that is robust to the inclusionof further variables. Our ndings suggest that cultural factors are to somedegree an expression of the behavior acquired under dierent institutionalenvironments.

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Authors: Busch, Christian; Lassmann, Andrea

Publisher: World Bank

Data Collections: IPUMS USA

Topics: Other, Poverty and Welfare

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