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Mexican-Hispanic Self-Employment Entry: The Role of Business Start-Up Constraints

Author

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  • Lofstrom, Magnus

    (Public Policy Institute of California)

  • Wang, Chunbei

    (University of Oklahoma)

Abstract

This paper examines causes of the low self-employment rates among Mexican-Hispanics by studying self-employment entry utilizing the 1996 panel of the Survey of Income and Program Participation (SIPP). The data show that Mexican-Hispanics are less likely to be self-employed as well as entering self-employment, relative to non-Hispanic whites. Importantly, we analyze self-employment by recognizing heterogeneity in business ownership across industries and show that a classification of firms by human and financial capital “intensiveness”, or entry barriers, is effective in explaining differences in entrepreneurship across ethnic groups. We show that the lower self-employment entry rates among Mexican-Hispanics are due to lower entry rates into business ownership of firms in relatively high-barrier industries. In fact, Hispanics are more likely to start-up a business in a low-barrier industry than whites.

Suggested Citation

  • Lofstrom, Magnus & Wang, Chunbei, 2006. "Mexican-Hispanic Self-Employment Entry: The Role of Business Start-Up Constraints," IZA Discussion Papers 2422, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2422
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    Cited by:

    1. Frijters, Paul & Kong, Tao Sherry & Meng, Xin, 2011. "Migrant Entrepreneurs and Credit Constraints under Labour Market Discrimination," IZA Discussion Papers 5967, Institute of Labor Economics (IZA).
    2. Cathy Yang Liu & Gary Painter & Qingfang Wang, 2015. "Immigrant entrepreneurship and agglomeration in high-tech industries in the USA," Chapters, in: Charlie Karlsson & Urban Gråsjö & Sofia Wixe (ed.), Innovation and Entrepreneurship in the Global Economy, chapter 8, pages 184-209, Edward Elgar Publishing.
    3. Gänser-Stickler, Gertraud M. & Schulz, Matthias & Schwens, Christian, 2022. "Sitting on the fence - Untangling the role of uncertainty in entrepreneurship and paid employment for hybrid entry," Journal of Business Venturing, Elsevier, vol. 37(2).
    4. Loren Henderson & Cedric Herring & Hayward Horton & Melvin Thomas, 2015. "Credit Where Credit is Due?: Race, Gender, and Discrimination in the Credit Scores of Business Startups," The Review of Black Political Economy, Springer;National Economic Association, vol. 42(4), pages 459-479, December.
    5. Bruder, Jana & Neuberger, Doris & Räthke-Döppner, Solvig, 2008. "Financial constraints of ethnic entrepreneurship: Evidence from Germany," Thuenen-Series of Applied Economic Theory 84, University of Rostock, Institute of Economics.
    6. Cathy Yang Liu, 2012. "Intrametropolitan Opportunity Structure and the Self-Employment of Asian and Latino Immigrants," Economic Development Quarterly, , vol. 26(2), pages 178-192, May.
    7. Marlene Orozco, 2020. "Reconceptualizing the Enclave: Measuring Success Among Latino‐Owned Businesses," Social Science Quarterly, Southwestern Social Science Association, vol. 101(4), pages 1374-1396, July.

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    More about this item

    Keywords

    Hispanic; entrepreneurship; self-employment;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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