Department of Economics, UCSC

We examine trends in entrepreneurship among white and black men from 1910 to 1990 using Census and CPS microdata.  Self-employment rates fell over most of the century and then started to rise after 1970.  For white men, we find that the decline was due to declining rates within industries, but was counterbalanced somewhat by a shift in employment towards high self-employment industries.  Recently, the increase in business ownership was caused by an end to the within industry decline and the continuing shift in employment towards high self-employment industries.  We also find that social security benefits, and immigration patterns do not explain the recent upturn in self-employment.  For black men, we find that the self-employment rate remained at a level of roughly one-third the white rate from 1910 to 1990.  The large and constant gap between the black and the white rates is not due to blacks being concentrated in low self-employment rate industries.  We also find that absent continuing forces holding down black self-employment, a simple inter-generational model of self-employment suggests that black and white rates would converge quickly.