Residential segregation and ethnic enterprise in US metropolitan areas

In this paper, we specify and estimate a model of minority group enterprene urship that incorporates individual, household, and metropolitan-level fact ors. Among the metropolitan factors we consider is residential segregation, which might he thought to enhance business opportunities by concentrating demand and creating protected market niches. Whereas some degree of geograp hic concentration may be beneficial for certain types of enterpreneurship, higher level of residential segregation are likely to be detrimental to ent repreneurial endeavors because of the tendency for segregation to interact with skewed minority income distributions to concentrate poverty geographic ally. Using data from the 1990 U.S. Census, we estimate a model to measure the effect of segregation on the likelihood of entrepreneurship among diffe rent racial/ethnic groups in U.S. metrpolitan areas. We find that beyond ve ry moderate levels, segregation actually works to lower the odds of entrepr eneurship.