Consumer Discrimination and Self-Employment / George J. Borjas, Stephen G. Bronars.

Format:

Book

Author/Creator:

Borjas, George J.

Contributor:

National Bureau of Economic Research.

Bronars, Stephen G.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2627.

NBER working paper series no. w2627

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1988.

Summary:

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.

Notes:

Print version record

June 1988.