Abstract
This study explored relationships among young adults’ wealth and entrepreneurial activities with emphasis on how these relationships differed among racial and ethnic groups. Using data from the 1997 National Longitudinal Survey of Youth, results indicated that young adults’ (N = 8984) higher accumulated amounts of wealth were associated with pursuing self-employment at higher rates; however, differences emerged when the associations were explored with various types of wealth and within racial and ethnic groups. Black young adults’ greater debt and net worth were associated with their increased likelihoods of self-employment. Among Latino/a young adults, greater liquid assets and net worth were associated with increased likelihoods of self-employment. Wealth was unrelated to white young adults’ self-employment. Wealth appeared to play an outsized role in the self-employment of black and Latino/a young adults compared to that of their white counterparts. In other words, racial and ethnic minority young adults may have a heavier burden for generating their own capital to embark on entrepreneurial activities when mainstream credit markets are unresponsive or inaccessible. Policy implications are discussed.
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Notes
The authors of this paper focus on racial and ethnic groups including blacks, Latinos/as, and whites because the data source we used for the analysis did not have sufficient representation from other groups, including marginalized and oppressed racial and ethnic groups of color such as Native Americans, Southeast Asians, or Africans. However, the authors recognize and validate the likely similar experiences of other marginalized and oppressed racial and ethnic groups of color in the US.
The use of propensity score weighting did not permit us to simultaneously perform formal tests of interaction between young adults’ race and ethnicity and their wealth. At the same time, propensity score weighting also provided a unique way to consider these relationships. Balancing the combined sample across wealth categories could be interpreted as attempting to minimize any observed differences or selection bias that might have emerged by race and ethnicity and could have unduly influenced the associations between wealth and self-employment. In other words, the unbalanced results could allow for greater scrutiny regarding whether the relationships were being driven in large part by racial and ethnic wealth inequalities. However, part of our question was indeed related to an interaction between young adults’ race and ethnicity and wealth, asking whether there were within-group differences that might be masked by analyzing the relationships in a combined sample. We performed analyses in the combined sample without propensity score weighting in order to test for interactions between young adults’ race and ethnicity and their wealth in predicting self-employment. None of the interactions were significant at p < .05; however, there was a negative interaction that approached significance between race and ethnicity and liquid assets (β = −.074; SE = .039; p = .057). This relationship was consistent with the relationships that emerged within the samples of white, black, and Latino/a young adults between liquid assets and self-employment.
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Friedline, T., West, S. Young Adults’ Race, Wealth, and Entrepreneurship. Race Soc Probl 8, 42–63 (2016). https://doi.org/10.1007/s12552-016-9163-z
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DOI: https://doi.org/10.1007/s12552-016-9163-z