Residential segregation and ethnic enterprises

In this paper, we specify and estimate a model of minority group entrepreneurship that incorporates individual, household, and metropolitan-level factors. Among the metropolitan factors we consider is residen-tial segregation, which might be thought to enhance business opportunities by concentrating demand and creating protected market niches. Whereas some degree of geographic concentration may be beneficial for cer-tain types of entrepreneurship, higher levels of residential segregation are likely to be detrimental to entrepreneur-ial endeavors because of the tendency for segregation to interact with skewed minority income distributions to concentrate poverty geographically. Using data from the 1990 U.S. Census, we estimate a model to measure the effect of segregation on the likelihood of entrepreneurship among different racial/ethnic groups in U.S. metropolitan areas. We find that beyond very moderate levels, segregation actually works to lower the odds of entrepreneurship. Entrepreneurship has long been recognized as an important mechanism for survival and upward mobility among immigrant and minority groups in the United States. The quintessen-tial American success story is of a person who arrives with nothing but a dream, and through innovation and hard work, turns that dream into a successful business enterprise. Although the authenticity of this story is questionable, entrepreneurship can, indeed, play a vital role a