Self-Employment, Family Background, and Race

Working Paper: NBER ID: w7344

Authors: Michael Hout; Harvey S. Rosen

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 pick-up 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 pick-up 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.

Keywords: No keywords provided

JEL Codes: J24; J15

Causal Claims

Cause	Effect
Father's self-employment status (J23)	Offspring self-employment (L26)
Father's self-employment status (J23)	Offspring self-employment varies by race (J79)
Family structure (J12)	Offspring self-employment rates by race (J79)
Immigrant self-employment rates (J69)	Next generation self-employment propensity (L26)