Center on Assets, Education, and Inclusion

This study explored relationships among young adults’ wealth and entrepreneurial activities with emphasis on how these relationships differ among racial and ethnic groups. Using data (N = 8,984) from the 1997 National Longitudinal Survey of Youth, results indicate that being Black or Latino/a, as well as liquid asset holdings and net worth, were significantly related to the likelihood of self-employment. In analyses disaggregated by race or ethnicity, greater liquid asset holdings were associated with the decreased likelihood of self-employment among white young adults. Black young adults’ greater debt and net worth were associated with increased likelihoods of entrepreneurial activity. Among Latino/a young adults, greater liquid asset holdings and net worth were associated with increased likelihoods of self-employment. Wealth may play an outsized role in the self-employment of black and Latino/a young adults compared to that of their white counterparts. 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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Citation

Friedline, T., & West, S. (2015). Young adults' race, wealth, and entrepreneurship. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

Financial Inclusion Working Paper Year 2015