Determining What Factors Make People More Likely to be Entrepreneurial

It has been claimed that entrepreneurship growth is one path to building and sustaining urban and rural regional
economies (Edmiston, 2007; Henderson, 2002). Proponents argue that economic development practices that
enhance and support entrepreneurship are essential because they cultivate innovation that, in turn, creates new jobs,
new wealth, and a better quality of life. However, the income of self‐employed workers, as opposed to just the number of self‐employed, is a critical policy concern because economic development occurs through increases in income and not just employment. This distinction is important. Identifying and quantifying the personal, cultural, and regional economic factors that influence self‐employed income provides policy makers with another tool to examine and better understand the mechanisms through which entrepreneurship can enhance regional economic development. This study represents an initial step in the analysis of a comprehensive set of determinants of individual self‐employed income.

In this article, ARE Associate Professor Kathryn Boys and her co-authors identify how personal attributes, such as education, race, age, and gender, both explain differences in self‐employment income and vary in importance across the income distribution. Knowledge of the determinants of self‐employment income is critical to entrepreneurial development strategies if the development goal is to increase incomes not just employment.

The study confirmed that educated, white males with access to capital typically earn the most as entrepreneurs, but there were also some interesting discoveries about other characteristics of entrepreneurs.

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