Self-Employment, Family Background, and Race

Abstract

We focus on the intergenerational transmission of the propensity to be self-employed.Our emphasis is on the role of family background, and in particular, on what we call the intergenerational pickup rate with respect to self-employment, the probability that a person with a self-employed parent will become self-employed him or herself.We use the General Social Survey, a data source with rich information on individuals' family histories, to investigate how family background affects self-employment probabilities and to document how racial and ethnic groups differ with respect to the intergenerational pickup rate.We confirm earlier findings that father's self-employment status is an important determinant of offspring's self-employment outcomes.New results include: 1) The impact of paternal self-employment differs by race.2) Even independent of father's occupation, family structure plays a role.3) Blacks have lower self-employment rates than whites in part because they have different family structures; still, within each family type, blacks have lower self-employment rates.4) Extrapolating current patterns into the future, there is no indication that black and white self-employment rates will converge any time soon.5)The relatively high self-employment rates of immigrants carry into the next generation, but not beyond that.6) Male immigrants who have self-employed fathers re no more likely to be self-employed than other immigrants.

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