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No abstract

Among black and white families, entrepreneurs hold disproportionately more wealth than workers. Black entrepreneurs hold a lower fraction of black family wealth than white entrepreneurs hold of white family wealth, because black families have a lower rate of entrepreneurship. Black and white entrepreneurs have more upward and less downward mobility in the wealth distribution than black and white workers, respectively. The black entrepreneurs and white entrepreneurs have similar upward mobility and black entrepreneurs less downward mobility in the wealth distribution. The entrepreneurs save at higher rates than workers, and the saving rates of black entrepreneurs and white entrepreneurs are not found to differ.

Does business ownership reduce the wealth disparity between Black and White households? The author uses Panel Study of Income Dynamics (PSID) data on family wealth in 1999 through 2009 to examine the levels of wealth and changes in wealth of entrepreneurs and workers among Black and White families. Black entrepreneurs (self-employed) have higher wealth levels and more upward wealth mobility than do Black workers. The upward wealth mobility of Black entrepreneurs is equivalent to that of White entrepreneurs, while the wealth mobility of White entrepreneurs is greater than that of White workers. These findings are consistent with Black entrepreneurship reducing the wealth disparity between Black and White families.