NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Consumer Discrimination and Self-Employment

George J. Borjas, Stephen G. Bronars

NBER Working Paper No. 2627 (Also Reprint No. r1269)
Issued in June 1988
NBER Program(s):   LS

Self-employment rates and incomes differ significantly by race. We show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller. Equilibrium income distributions have two properties: mean black incomes are lower than mean white incomes, and the returns to ability are lower for black than for white sellers. Able blacks, therefore, are less likely to self-select into the self-employment sector than able whites. Using the 1980 Census data, we find that observed differences in the self-employment income distributions are consistent with the theoretical predictions.

download in pdf format
   (314 K)

download in djvu format
   (208 K)

email paper

This paper is available as PDF (314 K) or DjVu (208 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2627

Published: Journal of Political Economy, Vol. 97, No. 3, pp. 581-605, (June 1989).

Users who downloaded this paper also downloaded these:
Borjas w1942 The Self-Employment Experience of Immigrants
Hout and Rosen w7344 Self-Employment, Family Background, and Race
Dunn and Holtz-Eakin w5622 Financial Capital, Human Capital, and the Transition to Self-Employment:Evidence from Intergenerational Links
Blanchflower and Oswald w3252 What Makes an Entrepreneur? Evidence on Inheritance and Capital Constraints
Bertrand and Mullainathan w9873 Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us