Abstract

The paper investigates what causes differences in the rate of entrepreneurial propensity and new business creation between ethnic groups. From previous studies, it is well known that there are significant differences in entrepreneurial activity between ethnic groups and between incumbent and immigrant populations. Specifically, it has been shown that immigrant tend to be involved in entrepreneurship more than local groups but that trends across immigrant groups change over time. We use a large sample of individual level observations collected in 2003 and 2004 in the United Kingdom for the Global Entrepreneurship Monitor (GEM) project. Our sample includes more than 30,000 observations. Our research is made possible by the fact that, unlike most data sets on entrepreneurship, GEM data includes variables related to the demographic and economic characteristics of each surveyed individual (age, income, level of education) as well as "perceptual" variables, i.e. answers to questions related to subjective perceptions regarding perceived opportunities, risk of failure, etc.

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