Scholars have implicated racial wealth inequality in racial disparities in business ownership and success, and education debt. However, we know less about the extent to which entrepreneurial returns from educational achievement potentially vary by race, and the potential impact of education debt on racial inequality in entrepreneurship. In this talk, Daniel Auguste, MLK Visiting Assistant Professor at MIT Sloan School of Management, and an assistant professor at Florida Atlantic University, addresses this gap in the literature by:
- examining the extent of the profit that black and white entrepreneurs gain from their ventures
- how it varies by their educational achievement
- the degree to which student loan debt affects racial differences in business profit
Drawing on a nationally representative sample of black and white entrepreneurs, Daniel finds that, across all education levels, black business owners are less likely than their white counterparts to make a positive profit or a profit of at least $10,000. For example, white business owners with a college degree have a 14.60% greater likelihood of making a positive profit than black business owners with a college degree. He also finds that, student loan debt has a negative effect on business profit among black business owners, whereas it has no significant effect on business profit among white business owners. These results stress the extent of racial stratification in the entrepreneurship arena.
This talk is part of the blackbox Seminar, a D^3 Assembly series hosted by the D^3 blackbox Lab, that is open to faculty, doctoral students, and academic researchers.
Email us at blackboxlab@hbs.edu for information on attending this seminar.