Does Disparity in Self-Employment Rates Imply Discrimination? An Empirical Investigation

We investigate whether disparities in self-employment rates across racial or ethnic groups indicate discrimination. We use the 5 percent Public Use Microdata Samples (PUMS) of the 2000 Census of Population and Housing to calculate self-employment rates for whites, African-Americans, Hispanics, and Asians and find disparities between whites and the other groups. However, when we utilize specific Asian groups instead of the broad category of Asian, some disparities are positive (Koreans, for example). We also examine self-employment rates for Chinese by place of birth and find some statistically significant disparities. Given that there are disparities even when they are highly unlikely to be the result of discrimination, we conclude that using the disparities to infer discrimination is not appropriate.