Racial inequality in business ownership and income

Abstract

The large and persistent racial and ethnic disparities found in business ownership and performance contribute to broader economic inequality. Using the latest US Census household microdata and statistical decomposition techniques, I explore several potential barriers to minority business ownership and income. I examine patterns for the four major racial and ethnic groups in the United States: African-Americans, Latinos, Asians, and non-Latino whites. I find that low levels of wealth contribute to why blacks and Latinos have lower business ownership rates, and high levels of wealth increase Asian business ownership rates. Low levels of education contribute to why blacks and Latinos have lower business income, and high levels of education increase Asian business income. Blacks, Latinos, and Asians are relatively young compared to whites, reducing business ownership rates.