Determinants of entrepreneurship in America
- Publication Year:
- Repository URL:
- self; variables; model; average; effect; Labor Economics; Macroeconomics; United States History
Historically, the United States has been the land of economic opportunity. This characterization of America is demonstrated by its numerous privately-owned companies, which currently amounts to over 22.5 million businesses (Hippie 2004). These enterprises are leading providers for innovative processes, products, and services. They are also employers and as such, these businesses affect the labor supply and demand curves. This study explores the personal characteristics, demographic trends, types of industry, and macroeconomic variables that are conducive to creating entrepreneurs. For this study, entrepreneurship is measured by whether a person is self-employed. A Probit model estimated with data from the National Longitudinal Surveys of Labor Market Experience provides insight on which personal and demographic variables impact entrepreneurial activity. An ordinary least squares model is used to measure the effect of macroeconomic variables on self-employment. Additionally, the OLS model analyzes the causality effect that self-employment may have on average hourly wages. The results from this study indicate that the industry type has the greatest consistent impact on entrepreneurship. Other independent variables that affect entrepreneurship are gender, race, education level, work experience, and region. However, the historical economic context determines the magnitude of the marginal effects for these variables. The results from the model analyzing self-employment’s effect on average hourly wages support the labor supply and demand curve theory that a rise in self-employment also increases the average hourly wage level.