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

• Published in: The Annals of the American Academy of Political and Social Science 2007-09, Vol.613 (1), p.32-46
• Main Authors: Lofstrom, Magnus, Wang, Chunbei
• Format: Article
• Language: English
• Subjects: Business; Business - United States; Business ownership; Business service industries; Business studies; Constraints; Construction industries; Educational attainment; Employment - Mexican Americans; Entrepreneurship; Ethnicity; Hispanic Americans; Hispanic business enterprises; Hispanic people; Hispanics; Industry; Mexican Americans; Mexicans; Minority owned businesses; Ownership; Panel data; Policy making; Retail industries; Self Employment; Self-employed workers; Start up firms; Startups; Trade and industrial education; United States - Labor sector
• ISSN: 0002-7162; 1552-3349
• DOI: 10.1177/0002716207303577

This article examines causes of the low self-employment rates among Mexican-Hispanics by studying self-employment entry using 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 or enter self-employment, relative to non-Hispanic whites. The authors 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. The authors 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.