Abstract
We utilize individual panel data from the 1996 and 2001 Survey of Income and Program Participation (SIPP) to analyze the relative success of self-employed female Hispanics. To allow for a meaningful comparison of earnings between self-employed and wage/salary women, we generate different earnings measures addressing the role of business equity. We compare earnings of Hispanic female entrepreneurs to both Latina wage/salary workers and to self-employed female non-Hispanic whites. Latina entrepreneurs are observed to have lower mean earnings than both white female entrepreneurs and Latina employees. However, our findings indicate that Latina entrepreneurs often do well, once differences in mean observable characteristics, such as education, are taken into account. Self-employed Latinas are estimated to earn more than observationally similar non-minority white female entrepreneurs and slightly less than observationally similar wage/salary-employed Latinas.
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Notes
Similarly, in our analysis, we restrict female employees to those who report typically working at least 25 h per week.
The choice of self-employment or wage/salary work is not modeled in our analysis below. Hence, the estimated hypothetical earnings of Latina entrepreneurs if they were in wage/salary work may not be a true reflection of Latinas’ counterfactual earnings in employment.
Note that, unlike in our ethnic self-employment earnings gap analysis, the earnings measures utilized here are based on total annual earnings which include reported earnings from, if relevant, both self-employment and wage/salary work.
In fact, the results indicate higher earnings for Latina entrepreneurs had they possessed the characteristics of their employed counterparts but holding years of experience at the higher mean Latina entrepreneur level.
References
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Lofstrom, M., Bates, T. Latina entrepreneurship. Small Bus Econ 33, 427–439 (2009). https://doi.org/10.1007/s11187-009-9203-9
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DOI: https://doi.org/10.1007/s11187-009-9203-9