Date of Award
Doctor of Philosophy (PhD)
Dr. Alberto Davila
Dr. Jose A. Pagan
Dr. Dora E. Saavedra
A growing interest in studying the self-employment decision can be attributed to the conventional wisdom that small business formation is necessary for economic development. Extant research has also begun to explore the self-employment determinants of emerging populations, such as immigrants and African Americans, emphasizing that there is need for better policies aimed at helping these populations. Puerto Rico and Puerto Ricans epitomize this need to pursue these two areas of research. To specifically address these areas, this dissertation pursues two objectives: (1) to empirically analyze the self-employment trends of Puerto Ricans and mainland Puerto Ricans against other groups (Dominicans, Cubans, Mexicans) in both Puerto Rico and the United States, and (2) to explain why differences exist in small business financing sources among various groups (Island-born Puerto Ricans, mainland Puerto Ricans and immigrants) in Puerto Rico.
Econometric techniques such as switching regressions and multinomial logit models are employed for the stated purposes. Moreover, the econometric analysis draws upon several data sources: selected samples from both the United States and Puerto Rican Censuses of Population and Housing, and a small business survey developed by the Center for Economic Development at the University of Puerto Rico.
Clearly, understanding the factors that may influence the self-employment decision among different ethnic groups in Puerto Rico and the United States can promote the creation of policy initiatives that foster entrepreneurial growth among these groups. In this light, the results from this study add to extant development literature regarding the role of small businesses on economic growth and to the importance of formulating adequate policies to ensure that small entrepreneurs have access to capital markets.
The results of this dissertation suggest that in both Puerto Rico and the United States, Puerto Rican participation in the self-employment sector did not increase as rapidly as compared to Cubans, Dominicans/Mexicans, and other immigrants/Hispanics during the 1980s. Moreover, the analysis using the Public Use Microdata Samples (PUMS) data do not show evidence of selection into the self-employment sector among Puerto Ricans, although the Integrated Public Use Microdata Series (IPUMS) sample does show a positive selection into the self-employment sector for the Puerto Rican sample during the 1980s.
This dissertation then finds evidence to suggest that Puerto Ricans have lower levels of entrepreneurial involvement. The estimation results from a multinomial logit of financing sources, employing the aforementioned survey, support the hypothesis that mainland Puerto Ricans and immigrants have greater access to credit markets than Island-born Puerto Ricans. The results employing the Census data are also consistent with the view that Puerto Ricans and immigrants are negatively selected into the entrepreneurial sector.
University of Texas-Pan American