TY  - JOUR
AU  - Borjas,George J.
AU  - Bronars,Stephen G.
TI  - Consumer Discrimination and Self-Employment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2627
PY  - 1989
Y2  - September 1989
UR  - http://www.nber.org/papers/w2627
L1  - http://www.nber.org/papers/w2627.pdf
N1  - Author contact info:
George J. Borjas
Harvard Kennedy School
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1393
Fax: 617/495-9532
E-Mail: gborjas@harvard.edu

Stephen Bronars
9113 Bell Mountian Drive
Austin, TX  78730-2704
E-Mail: sbronars@welchcon.com
AB  - 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.
ER  -