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Title: The role of past institutions and information transfer in understanding the Black-White gap in self-employment

Citation Type: Miscellaneous

Publication Year: 2009

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Abstract: It has been well documented in the literature that ethnicity matters significantly in the deter-mination of self-employment rates. In particular, African-American self-employment rates lagfar behind those of other racial groups. Similarly, the literature also provides evidence of thelong-lived nature of institutions and the relationship between institutions and decision-making.After controlling for the appropriate factors that can lead to self-employment differentials, wenote that the Black-White self-employment gap persists. We provide an explanation for this gap,focusing on the important role of repeated negative institutional shocks and how such shocks couldhave influenced generational transmission of information across time. We provide evidence insupport of this hypothesis by comparing African-American exposed to shocks to those who werenot. We find that African-Americans who were less likely to be influenced by negative institutionalshocks and the information transmission from these experiences, have similar self-employmentprobabilities to comparably situated White-Americans.

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Authors: Belton, Willie; Oyelere, Ruth U.

Publisher: Georgia Institute of Technology

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure, Other, Race and Ethnicity

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