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Entrepreneurship and Earnings among Young Adults from Disadvantaged Families

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  • Robert Fairlie

Abstract

Academicians and policymakers have argued that entrepreneurship provides a route out of poverty and an alternative to unemployment or discrimination in the labor market. Existing research, however, provides little evidence from longitudinal data on the relationship between business ownership and economic advancement for disadvantaged groups. I use data from the National Longitudinal Survey of Youth (NLSY) to examine the earnings of young business owners from disadvantaged families and make comparisons to young wage/salary workers from disadvantaged families. For young men from disadvantaged families, I find some evidence that self-employed business owners earn more than wage/salary workers. In contrast, I find that for young women from disadvantaged families business owners earn less than wage/salary workers. The results from these earnings comparisons are somewhat sensitive to the use of different measures of income and econometric models. Copyright Springer 2005

Suggested Citation

  • Robert Fairlie, 2005. "Entrepreneurship and Earnings among Young Adults from Disadvantaged Families," Small Business Economics, Springer, vol. 25(3), pages 223-236, October.
    • Handle: RePEc:kap:sbusec:v:25:y:2005:i:3:p:223-236
    DOI: 10.1007/s11187-003-6457-5
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    1. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
    2. Bruce D. Meyer, 1990. "Why Are There So Few Black Entrepreneurs?," NBER Working Papers 3537, National Bureau of Economic Research, Inc.
    3. David Blanchflower & A Oswald, 1993. "Entrepreneurship," CEP Discussion Papers dp0134, Centre for Economic Performance, LSE.
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    Cited by:

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    2. C. Praag & Peter Versloot, 2007. "What is the value of entrepreneurship? A review of recent research," Small Business Economics, Springer, vol. 29(4), pages 351-382, December.
    3. Mirjam van Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2009. "Returns for Entrepreneurs versus Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vis-a-vis Wage Employees," Tinbergen Institute Discussion Papers 09-111/3, Tinbergen Institute.
    4. Alina Sorgner & Michael Fritsch & Alexander Kritikos, 2017. "Do entrepreneurs really earn less?," Small Business Economics, Springer, vol. 49(2), pages 251-272, August.
    5. Marco Caliendo & Alexander Kritikos, 2010. "Start-ups by the unemployed: characteristics, survival and direct employment effects," Small Business Economics, Springer, vol. 35(1), pages 71-92, July.
    6. Wei Xiao & Mingqin Wu, 2021. "Life-cycle factors and entrepreneurship: evidence from rural China," Small Business Economics, Springer, vol. 57(4), pages 2017-2040, December.
    7. Ruth Oyelere & Willie Belton, 2013. "Black–White gap in self-employment. Does intra-race heterogeneity exist?," Small Business Economics, Springer, vol. 41(1), pages 25-39, June.
    8. Joanna Tyrowicz & Joanna Nestorowicz, 2010. "Cynicism Starts Young: Age and Entrepreneurship over Transition," Working Papers 2010-02, Faculty of Economic Sciences, University of Warsaw.
    9. Mirjam Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2013. "The higher returns to formal education for entrepreneurs versus employees," Small Business Economics, Springer, vol. 40(2), pages 375-396, February.
    10. Te Klangboonkrong & Ning Baines, 2021. "Disability entrepreneurship research: review and critical reflection through the lens of individual-opportunity nexus," Working Papers 51, Birkbeck Centre for Innovation Management Research, revised Apr 2021.
    11. M. Thomas, 2009. "The impact of education histories on the decision to become self-employed: a study of young, aspiring, minority business owners," Small Business Economics, Springer, vol. 33(4), pages 455-466, December.
    12. Campopiano, Giovanna & De Massis, Alfredo & Rinaldi, Francesca Romana & Sciascia, Salvatore, 2017. "Women’s involvement in family firms: Progress and challenges for future research," Journal of Family Business Strategy, Elsevier, vol. 8(4), pages 200-212.
    13. Magnus Lofstrom, 2011. "Low-skilled immigrant entrepreneurship," Review of Economics of the Household, Springer, vol. 9(1), pages 25-44, March.
    14. Gregory N. Price & Chris W. Surprenant, 2022. "The Treatment Effect of Business Education on the Supply of High School Entrepreneurs in Atlanta and New Orleans," The American Economist, Sage Publications, vol. 67(1), pages 85-98, March.
    15. Murat Yalcintas & Oyk㜠Iyigãœn & Gokhan Karabulut, 2023. "Personal Characteristics And Intention For Entrepreneurship," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(02), pages 539-561.
    16. Neema Mori, 2015. "Access to Business Development Support Services and Performance of Youth-Owned Enterprises in Tanzania," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 11(2), pages 57-81.
    17. Eddy Tukamushaba & Laura Orobia & Babu George, 2011. "Development of a conceptual model to understand international social entrepreneurship and its application in the Ugandan context," Journal of International Entrepreneurship, Springer, vol. 9(4), pages 282-298, December.
    18. Efendic, Nedim & Andersson, Fredrik W. & Wennberg, Karl, 2015. "Growth in first- and second-generation immigrant firms in Sweden," Ratio Working Papers 265, The Ratio Institute.
    19. Magnus Lofstrom, 2013. "Does self-employment increase the economic well-being of low-skilled workers?," Small Business Economics, Springer, vol. 40(4), pages 933-952, May.
    20. Maria Noguera & Claudia Alvarez & José M. Merigó & David Urbano, 2015. "Determinants of female entrepreneurship in Spain: an institutional approach," Computational and Mathematical Organization Theory, Springer, vol. 21(4), pages 341-355, December.
    21. Thor Olav Thoresen, 2009. "Income Mobility of Owners of Small Businesses when Boundaries between Occupations are Vague," CESifo Working Paper Series 2633, CESifo.
    22. Cirstea Petronela & Anagnoste Sorin, 2023. "Young, Wild & Entrepreneurial: Generation Z’s Affinity for Entrepreneurship," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 17(1), pages 930-947, July.

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