State of Black Entrepreneurship

State of Black Entrepreneurship



State of Black Entrepreneurship

Introduction

Self-employment is a crucial facet of the United States economy. Notably, entrepreneurship has been a entails for the economic advancement of many ethnic groups. Policy manufacturers and scholars alike address self-employment as an alternate to unemployment and a path out of poverty. Also, small business owners have important political leverage in the United States. Accordingly, the under-representation of some racial assemblies in business ownership (see Table 1) suggests that these assemblies may own less political power than is warranted granted their community share (Fairlie and Meyer, 2000).

 

Table 1. 1997 U.S. firm ownership by rush

U.S. companies a with paid employees

Percent

White non-Hispanic owned

82.6

Asian and Pacific islander owned

5.4

Hispanic owned

4.0

Black owned

1.8

American Indian and Alaska native owned

0.6

Other

5.6

Source: U.S. Census Bureau, 2003 Statistical Abstract of the U.S.

a The facts and numbers utilised by the U.S. Census Bureau characterises a firm as a “ business consisting of one household establishment or more that the describing firm particular under its ownership or command at the end of 1997.”

 

The somewhat reduced chronicled rate of African American entrepreneurship is a well-known detail (see Table 2).2Fairlie and Meyer (2000) revised patterns in self-employment amidst White and Black men from 1910 to 1990. With nearly a 100 years of facts and numbers, they uncovered some unforeseen outcome (Fairlie and Meyer, 2000):

• In the time span from 1910 to 1990, the Black self-employment rate usually pursued the identical main heading of change as the White self-employment rate.

• For 80 years, the self-employment rate for Black men was consistently at a grade of roughly 1/3 of the White rate.

• Based on clues from replication utilising a straightforward intergenerational form of self-employment, Fairlie and Meyer resolved that if not for “continuing factors” reducing Black self-employment (e.g., discrimination or capital that is passed intergenerationally), racial convergence in self-employment rates could happen inside two generations.

 

 

Table 2. United States self-employment rates (%)

1910

1920

1940

1950

1960

1970

1980

1990

Self-employment rates for

 Blacks

5.3

5.8

6.1

4.1

3.6

3.9

3.3

4.1

 Whites

16.0

14.7

13.8

13.1

11.1

10.0

10.7

11.4

Source: Fairlie and Meyer (2000).

Numerous investigators have endeavoured to evolve interpretations for this gigantic, 100 year vintage, discrepancy between Black and White entrepreneurship grades that, as asserted by Fairlie and Meyer, feasibly could be eradicated inside a couple of generations (for demonstrations, glimpse Borjas and Bronars, 1989 and Kawaguchi, 2005). Using regression investigation and the identical decomposition methodology utilised by Smith and Welch (1989), Fairlie and Meyer (2000) resolved that racial convergence in learning grades and tendencies in demographic components (including the Great Black Migration: 1915-1920) did not have large consequences on the tendency in the racial gap in the self-employment rate. They discovered that the large racial gap in self-employment all through the 20th 100 years was mainly due to the low Black self-employment rates inside all commerce and not easily the outcome of Blacks being over-represented in parts distinuished by reduced self-employment. Also, their empirical outcome demonstrated that neither smaller relation salaries neither the primary need of business experience could assist to interpret the present reduced grades of Black self-employment.

While reduced grades of learning, reduced asset grades, lesser probabilities of having ...