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4 J. Mgmt. & Sustainability 1 (2014)

handle is hein.journals/jms4 and id is 1 raw text is: Journal of Management and Sustainability; Vol. 4, No. 1; 2014 ISSN1925-4725 E-ISSN 1925-4733 Published by Canadian Center of Science and Education Self-Employment of Latinos and White Non-Latinos in the Pacific Northwest, U.S.A.: Choice and Income Abelardo Rodriguez'& Stephen Devadoss1 'Department of Agricultural Economics and Rural Sociology, University of Idaho Moscow, U.S.A. Correspondence: Abelardo Rodriguez, Casa del Carmen, Calle 41 No. 481, 52 y 54, Mdrida, Yucathn, 97000 Mexico. Tel: 52-999-923-3709. E-mail: rlabelardo ttgmail.com Received: September 1, 2013 Accepted: December 12, 2013 Online Published: February 25, 2014 doi: 10.5539/jms.v4nlpl URL: http://dx.doi.org/10.5539/jms.v4nlpl Abstract Using data from the American Community Survey 2005, 2006, and 2007 we quantify the socio-economic factors that determine the likelihood of being self-employed (SE) of Latinos and White non-Latinos in the Pacific North West, U.S., and how these factors affect their income. Only 5.5% of Latinos are self-employed compared to 9.4% of White non-Latinos and Latinos earn 30% less than White non-Latinos. Non-linear decomposition results show that age and educational attainment explain 410% of the ethnic gap in the probability of being SE among the U.S. born. In contrast, gender, type of occupation, number of years in the United States, and good command of the English language explain 22% of the ethnic gap in the probability of being SE among immigrants. Linear decomposition of self-employment income (SEI) shows that age, marital status, and type of occupation explains 90% of the ethnic gap in SEI among the U.S. born; however, ethnic differences in SEI among immigrants are mixed. Thus, policies aimed to reduce the ethnic gap in SEI should take into account the skewed distribution of skills of Latinos, and the degree of transfer ability of immigrants' skills into the local environment. Reducing this gap poses the challenge of improving the skills of many self-employed Latino immigrants with limited choices or transferable experience. Keywords: Hispanic, White non-Latino, self-employment, immigrants, occupations, education 1. Introduction Hispanics or Latinos in the Pacific Northwest of the United States (PNW, including the states of Idaho, Oregon and Washington) are the largest and fastest growing minority and yet little is known about who is likely to choose to be self-employed or an entrepreneur and how they earn their income. This paper quantifies demographic and socioeconomic factors that determine Latino and White non-Latino self-employment and income in the PNW (Note 1). Rodriguez & Devadoss (2014) discuss the factors determining the wage gap between Latinos and White non-Latinos. Sef-employment is an alternative to those who want to make the transition away from wage labor because they perceive a prospect or had a major personal crisis such as the loss of a job, divorce or separation, among others. The former ones are described as opportunity-based entrepreneurs and the latter ones as necessity-based entrepreneurs (Acs, Desai, & Hessels, 2008). For individuals and families in immigrant, ethnic, and minority groups who are marginalized by the traditional labor force, business ownership represents an important independent means to simultaneously earn a livelihood and achieve self-actualization (Puriyear et al., 2008). Independence may be a strong enough motivation for seeking self-employment and the American dream. Self-employment does not necessarily require a specific level of educational attainment though it is acknowledged that work experience is desirable and beneficial for businesses requiring special skills. The Hispanic population in the PNW tripled from 380,000 in 1980 to 1,150,000 in 2007; ten percent of the 11.72 million individuals in the PNW are Latinos; 42% of the Latinos are foreign-born; and 82% of the Latinos are of Mexican descent (Pew Hispanic Center, 2008a & 2008b). Data from the American Community Survey (ACS, 2008) show that only 5.5% of the Latinos in the PNW are self-employed compared to 9.4% of White non-Latinos. Research on Hispanic self-employment and business creation has shown that Hispanic males are substantially less likely to be business owners relative to Whites (Lofstrom & Wang, 2007; Fairlie & Woodruff, 2007). The self-employment difference is particularly large for Mexican-Hispanics, and the exit rate of those who own a business is twice that of White entrepreneurs. Because of their limited educational background and

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