Wednesday, 18 December 2013

LatinTrade: Entrepreneurship and social mobility

The Inter-American Development Bank (IDB) has published the study Is Entrepreneurship a Channel of Social Mobility in Latin America? in which its authors, Francesca Castellani and Eduardo Lora, find that entrepreneurship doesn’t occur among people by chance. In fact, the evidence shows that entrepreneurs are found more frequently among higher-income groups who have more probability of having experienced intergenerational social mobility – that is, who have more years of education than their parents. The authors also show that in Colombia, for example, entrepreneurship is more common among more educated older men. In Uruguay, the children of entrepreneurs receive more years of education than the children of those who are not in business, regardless of the education level of the parents. The results of these two countries suggest that entrepreneurs are as much the result of more social mobility, as they are the cause of it. In Mexico, the authors found that the probability of becoming an entrepreneur increases when the father has also established a business of his own, which suggests that there is a high “model to follow” effect.

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