The Prevalence of Nascent Entrepreneurs in the United States : Evidence from the Panel Study of Entrepreneurial Dynamics

The prevalence rates for nascent entrepreneurs are determined using the Panel Study of Entrepreneurial Dynamics (PSED).A summary of the research design of the PSED is provided, and an overview of the information contained in the database.A three-stage model of the entrepreneurial process is presented: (1) the population of potential entrepreneurs, (2) the gestation phase, and (3) the firm infancy phase. The PSED gathered data from 64,622 individuals in the United States from 1998 to 2000. There were 1,261 respondents used in this study.Data analysis for entrepreneurs is reported by gender and ethnicity and the demographic variables of age, education, household income, and urban context. Among the findings: about 6.2% of U.S. adults are engaged in starting new firms. The rate for males is 8.1% and about twice that for women. The highest rate is among those 25 to 54 years old. The rate for African Americans is a statistically significant 50% higher than for caucasians.Among both caucasian men and women, those with more education are slightly more likely to form a firm. Among African Americans, the difference is significant, with those having graduate training being two to three times more likely to form businesses. Overall, urban areas increase rates of entrepreneurial activity. Since many startups involve more than one founder/owner, it is suggested for purposes of comparison with other data, one must adjust data for the number of nascent firms rather than nascent entrepreneurs. The conclusion provides brief summaries of other research findings drawn from the PSED. (TNM)