Working Paper: NBER ID: w13972
Authors: David G. Blanchflower
Abstract: n this paper I examine changes in self-employment that have occurred since the early 1980s in the United States. It is a companion paper to a recent equivalent paper that related to the UK. Data on random samples of approximately twenty million US workers are examined taken from the Basic Monthly files of the CPS (BMCPS), the 2000 Census and the 2006 American Community Survey (ACS). In contrast to the official definition of self-employment which simply counts the numbers of unincorporated self-employed, we also include the incorporated self-employed who are paid wages and salaries. The paper presents evidence on trends in self-employment for the US by race, ethnicity and gender. Evidence is also presented for construction which has self-employment rates roughly double the national rates and where there are strikingly high racial and gender disparities in self-employment rates. The construction sector is also important given the existence of public sector affirmative action programs at the federal, state and local levels directed at firms owned by women and minorities. I document the fact that disparities between the self-employment rates of white men and white women and minorities in construction narrowed in the 1980s, widened during the 1990s after the US Supreme Court's decision in Croson but then narrowed again since 2000 after a number of legal cases, which found such programs constitutional. Despite this substantial disparities remain, particularly in earnings. I also find evidence of discrimination in the small business credit market. Firms owned by minorities in general and blacks in particular are much more likely to have their loans denied and pay higher interest than is the case for white males. This is only partially explained by their lack of creditworthiness and is consistent with a finding of discrimination in the credit market by banks.
Keywords: self-employment; affirmative action; minorities; construction; credit discrimination
JEL Codes: J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Disparities in self-employment rates (white men vs minorities) (J15) | legal scrutiny of affirmative action (J78) |
| Legal scrutiny of affirmative action (J78) | decrease in public sector contracts awarded to minority-owned businesses (L33) |
| Discrimination in credit markets (J79) | access to capital for minority entrepreneurs (O16) |
| Black-owned firms (L84) | loan denial rates compared to white-owned firms (J15) |
| Affirmative action programs (J78) | narrowing of self-employment gap (2000 onwards) (J23) |
| Affirmative action programs (J78) | self-employment rates of black men in construction (J79) |