Does Business Ownership Provide a Source of Upward Mobility for Blacks and Hispanics?

Past research has indicated that disadvantaged minority groups may benefit from self-employment, which is hypothesized to decrease minority poverty levels, minority unemployment, and discrimination.However, little empirical evidence exists to demonstrate a correlation between minority self-employment and increased economic mobility. To study the impact of self-employment upon minorities, the research focuses on the earning patterns of self-employed and wage/salary-earning African-American and Hispanic individuals, comparing these results to those of their white counterparts.To study the earning patterns of the subjects, data were provided by the National Longitudinal Survey of Youth (NLSY), which collected data on young American men and women between 1979 and 1998.The limitations of these data set are discussed.Descriptive statistics are presented and explained. The results of the analysis revealed that:self-employed black and Hispanic men have greater mean and median earnings than their minority wage/salary counterparts; self-employed black men experience slower initial earnings than wage/salary workers; self-employed Hispanic men initially earn less than wage/salary workers, but experience quicker growth rates and slightly greater earnings after 9 years; and the earnings coefficients for both black and Hispanic women are not statistically significant.Self-employed black and Hispanic men still earn less than their white counterparts.The implications of challenges to many policies promoting minority self-employment are discussed. (AKP)