Race and entrepreneurship


This Harvard study looked at the economic phenomena of  ethic groups concentrating in specific occupational industries: 

We study the relationship between ethnicity, occupational choice, and entrepreneurship. Immigrant groups in the United States cluster in specific business sectors. For example, Koreans are 34 times more likely than other immigrants to operate dry cleaners, and Gujarati-speaking Indians are 108 times more likely to manage motels. We develop a model of social interactions where non-work relationships facilitate the acquisition of sector-specific skills. The resulting scale economies generate occupational stratification along ethnic lines, consistent with the reoccurring phenomenon of small, socially-isolated groups achieving consid- erable economic success via concentrated entrepreneurship. Empirical evidence from the United States supports our modelís underlying mechanisms.

The study shows - among other things - that social interactions (not necessarily market interactions) result in favorable economic outcomes and self-employment conditions for minority groups. We are shown that: 

relationships in an efficient market setting can generate long-run occupational stratification, and as a consequence lead to persistent differences in economic outcomes between distinct ethnic groups.

Within a purely economic context it’s clear that social relationships reduce the cost of acquiring sector-specific skills for entrepreneurship, as most jobs come via referrals and family ties. Within the context of demography, occupational choice reinforces initial group differences, and different ethnic groups cluster in different industries especially where those industries display ethnic homogeneity.


TL;DR: If you want to be an entrepreneur, start a business within an industry that your ethnicity specialises in. Tightly-knit ethnic communities tend to support each-other more (than outsiders) and this can lead to economic success in industries with defined ethnic clustering. 

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