Unequal Hard Times: Examining the Relationship Between Firm Owner Characteristics and Small Business Performance
Wei, Thomas E
Over the past few years, there has been a growing interest from federal, state and local governments in initiating and expanding efforts to support the young and small business ecosystem as a way to spur job creation, encourage innovation and close gaps in wealth inequality, especially in the wake of the Great Recession. In this paper, I examine the relationship between small business owner characteristics and small business performance during and after the Great Recession. I use data from the Kauffman Firm Survey, a longitudinal study of 4,928 newly-formed small businesses, to conduct a difference-in-differences analysis to compare 1) women-owned and men-owned small businesses and 2) minority-owned and non-minority-owned small businesses during the time period of 2004-2011. I find that minority-owned and women-owned small businesses perform relatively worse during and after the Great Recession, compared to non-minority-owned and men-owned small businesses. The relationship between firm owner characteristics, such as race and gender, and small business performance suggests that, with further research into why there are differences in firm performance, that policymakers may want to consider targeting or tailoring resources and supports toward specific groups of small business owners, such as women and minorities.
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