In many developed countries, ethnic groups comprise a growing minority of the labour force, and females are no longer a minority of employees. Yet ethnic groups exhibit pronounced differences in their propensities to be self-employed, while females remain a minority of the self-employed workforce in all developed economies. Why?

‘Minority entrepreneurship’ – defined here to encompass ethnic minorities and females – is attracting growing research interest. One reason might be the belief that entrepreneurship offers a route out of poverty and into economic advancement and assimilation for ethnic groups, especially immigrants (Sanders and Nee, 1996). Another is the concern that minorities may face discrimination that hinders their ability to practice entrepreneurship. And there is growing interest in promoting flexible labour markets, enabling females in particular to participate more effectively in the workforce.

It might be helpful to commence with several ‘stylised facts’ about ethnic minority entrepreneurship; females are treated later in the chapter. First, in the UK and the USA, it is pretty well established that blacks have self-employment rates that are substantially and persistently below average. For example, Clark and Drinkwater (1998) observed from 1991 British Census data that whites had self-employment rates twice that of black Caribbeans; according to Fairlie (1999), the white self-employment rate in the USA was three times that of blacks. According to Fairlie and Meyer (2000), this differential has persisted since at least 1910, suggesting that little has changed since Myrdal (1944) bemoaned the dearth of black-owned businesses in America.