nep-ent New Economics Papers
on Entrepreneurship
Issue of 2010‒07‒31
four papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Black-White Gap in Self-Employment in the U.S.: Do Cohort and Within Race Differences Exist? By Uwaifo Oyelere, Ruth; Belton, Willie
  2. Exchange Rate Fluctuations, Plant Turnover and Productivity By Ben Tomlin
  3. Índice de desenvolvimento municipal da micro e pequena empresa - ID-MPE do Rio Grande do Sul By Leonardo de Magalhães Leite; Wilhelm Eduard M. A. Meiners; Luiz Alberto Esteves; César Reinaldo Rissete
  4. The Informal Sector: An Equilibrium Model and Some Empirical Evidence from Brazil, Second Version By Aureo de Paula; Jose A. Scheinkman

  1. By: Uwaifo Oyelere, Ruth (Georgia Tech); Belton, Willie (Georgia Institute of Technology)
    Abstract: In this paper we ask three questions: First, is there evidence of a Black-White gap in self-employment between 1994-2002 and could the inclusion of the White immigrant population be driving this result? Second, do within race differences in self-employment exist among the U.S. born? Finally, do cohort differences in the Black-White self-employment gap exist among the U.S. born? These questions are based on some of the regression findings in our earlier paper focused on the role of information and institutions in understanding the Black-White gap in self-employment. We find that the Black-White self-employment gap is not driven by the existence of White immigrants in the data set. In addition, we find that within race and cohort differences exist in the Black-White self-employment gap. A subgroup of U.S. born African-Americans have a self-employment probability that is identical to that of U.S. born White-Americans. In addition, younger cohorts of African-Americans have a much smaller self-employment gap than do older African-Americans.
    Keywords: self-employment, disparities, black-white gap
    JEL: J10 J11 J15 L26
    Date: 2010–07
  2. By: Ben Tomlin
    Abstract: In a small open economy fluctuations in the real exchange rate can affect plant turnover, and thus aggregate productivity, by altering the makeup of plants that populate the market. An appreciation of the local currency increases the level of competition in the domestic market as import competition intensifies and export opportunities shrink, forcing less productive plants from the market and compelling new entrants to be more competitive than they otherwise would have been. Depreciations have the opposite effect, as import competition weakens and new export opportunities arise, less competitive plants are able to continue to operate in the market and crowd out new, more productive entrants. This paper develops a dynamic structural model that captures the effect of plantlevel productivity and real exchange rate fluctuations on plant entry and exit decisions in the Canadian agricultural implements industry, and how this, in turn, affects aggregate productivity. The model's dynamic parameters are estimated in two stages. Variable profit parameters and the per-period fixed cost of operation are estimated first using the Nested Pseudo Likelihood (NPL) algorithm, and then the parameters characterizing the distribution of unobserved potential entrant productivity, along with the cost of entry, are estimated in a second stage using the Method of Simulated Moments (MSM). Finally, simulations of the model are used to investigate the effects of shocks to the exchange rate process on aggregate industry productivity.
    Keywords: Productivity; Exchange rates; Market structure and pricing
    JEL: D21 D24 L11
    Date: 2010
  3. By: Leonardo de Magalhães Leite (Faculty of Economics, Universidade Federal de Juiz de Fora); Wilhelm Eduard M. A. Meiners (Business School, Universidade Positivo); Luiz Alberto Esteves (Department of Economics, Universidade Federal do Paraná); César Reinaldo Rissete (Business School, Universidade Positivo)
    Abstract: The promotion of public policy development, focusing on results, needs indicators for monitoring its effectiveness. The indices of municipal development, synthetic indices that capture certain aspects of local development, serve as reference for the diagnosis and monitoring of the results of the action of public management, such as important tools for planning. The ID-MPE - Municipal Development Index of Micro and Small Enterprise has as propose to guide the strategies and local policies of economic promotion, aiming to capture the favorable conditions for the establishment and growth of small local businesses. Applying the methodology of the ID-MPE for Rio Grande do Sul State shows the municipalities with the best business environments for the flourishing of MPE's, and serves as a benchmark for the promotion of local development policies based on the General Law of Micro and Small Enterprise.
    Keywords: Local development; micro and small firms; local development index
    JEL: L25 R12 C49
    Date: 2010
  4. By: Aureo de Paula (Department of Economics,University of Pennsylvania); Jose A. Scheinkman (Department of Economics, Princeton University)
    Abstract: We test implications of a simple equilibrium model of informality using a survey of 48,000+ small firms in Brazil. In the model, agent's ability to manage production differ and informal firms face a higher cost of capital and limitation on size, although these informal firms avoid tax payments. As a result, informal firms are managed by less able entrepreneurs, are smaller, and employ a lower capital-labor ratio. The model predicts that the interaction of an index of observable inputs to entrepreneurial ability and formality is positively correlated with firm size, which we verify in the data. Using the model, we estimate that informal firms in our dataset faced at least 1.3 times the cost of capital of formal firms.
    Keywords: Informal Sector, Tax Avoidance, Brazil
    JEL: H2 H3 K4
    Date: 2009–11–30

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