Publication Type

Journal Article

Version

publishedVersion

Publication Date

5-2017

Abstract

We examine the causal effect of neighborhood segregation on black entrepreneurship. We address neighborhood sorting by analyzing city averages and omitted variable bias by instrumenting for segregation using historical railroad configurations. We find that segregation has a significant positive effect: a 10 percentage point increase in the dissimilarity index decreases the racial gap by about 3.3 percentage points. To minimize the effect of cross-city sorting, we use a narrower sample constructed from outcomes of young adults and find a similar effect. Our findings are importantbecause historically, entrepreneurship has been an avenue out of poverty, and entrepreneurship has been promoted as a way to decrease welfare and unemployment. (C) 2017 Elsevier B.V. All rights reserved.

Keywords

Segregation, Inequality, Entrepreneurship, Self-employment

Discipline

Entrepreneurial and Small Business Operations | Race and Ethnicity

Research Areas

Applied Microeconomics

Publication

Economics Letters

Volume

154

First Page

88

Last Page

91

ISSN

0165-1765

Identifier

10.1016/j.econlet.2017.02.025

Publisher

Elsevier

Additional URL

http://doi.org/10.1016/j.econlet.2017.02.025

Share

COinS