The absence of the African-American owned business: An analysis of the dynamics of self-employment

Estimates from the Panel Study of Income Dynamics indicate that African-American men are one-third as likely to be self-employed as white men. The large discrepancy is due to a black transition rate into self-employment that is approximately one-half the white rate and a black transition rate out of self-employment that is Mice the white rate. Using a new variation of the Blinder-Oaxaca decomposition technique, I find that racial differences in asset levels and probabilities of having self-employed fathers explain a large part of the gap in the entry rate, but almost none of the gap in the exit rate.