Full Citation

Title: The Role of Information and Institutions in Understanding the Black-White Gap in Self-Employment

Citation Type: Working Paper

Publication Year: 2008

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Abstract: It has been well documented in the literature that ethnicity matters significantly in thedetermination of self-employment rates. In particular, African-American self-employmentrates lag far behind rates for other racial groups. Similarly, the literature also providesevidence of the long lived nature of institutions and the link between institutions and decisionmaking. After controlling for the appropriate factors that can lead to self-employmentdifferentials, we provide an explanation for the self-employment gap that still exists betweenAfrican-Americans and White Americans. We focus on the important role of repeatednegative institutional shocks and how such shocks influence the development of aninformation matrix as well as the transmission of information across time and generations.We show that African-Americans who were less likely to be influenced by negativeinstitutional shocks and the information stock created from these experiences, have similar self-employment rates to comparably situated White Americans.

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Authors: Belton, Willie; Oyelere, Ruth U.

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Publication Number: 3761

Institution: Institute for the Study of Labor

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Publisher Location: Bonn, Germany

Data Collections: IPUMS CPS

Topics: Race and Ethnicity

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