Using detailed work history data in the 1979 National Longitudinal Survey of Youth, I investigate the reasons behind the racial gap in self-employment. My analysis of an "age uniform" sample of men, all of whom are observed from age 22 to 40 years, reveals that racial differences in cross-sectional self-employment rates are largely due to the fact that minority workers' self-employment spells are relatively short-lived. Moreover, I find that minority workers' relatively high exit rates are driven primarily by transitions to nonemployment. Estimates from a multinomial logit model of self-employment exits suggest that minority workers' weak attachment to the labor market prior to entering self-employment is an important determinant of their transition from self-employment to nonemployment, while lack of prior industry and self-employment experience contributes to minorities' transitions to wage employment. When I assign blacks and Hispanics the same (mean) work histories as whites, the predicted black-white gap in the first-year self-employment survival rate decreases by 31% and the Hispanic-white gap decreases by 14%. © 2009 Springer Science+Business Media, LLC.
CITATION STYLE
Ahn, T. (2011). Racial differences in self-employment exits. Small Business Economics, 36(2), 169–186. https://doi.org/10.1007/s11187-009-9209-3
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