| Entrepreneurship has historically been a critical source of new job growth in the United States economy. In the face of a sluggish job recovery after the Great Recession, policymakers are attempting to spur job growth via entrepreneurship by increasing access to capital and decreasing regulatory hurdles. Recent studies find that perceptions of one's environment are highly correlated with new entrepreneurship and that perceptions of income inequality closely map to actual levels of income inequality. The results of this study show that there is in fact a non-linear relationship between income inequality and the decision to enter entrepreneurship. The relationship is strongest among low-income individuals, where increasing income inequality is clearly correlated with increased participation in entrepreneurship, but decreasing income inequality is correlated with only very small decreases in entrepreneurship. Middle-income individuals show a similar, but weaker, relationship. Any change in income inequality - positive or negative - is associated with a decrease in entrepreneurship for high-income individuals. That income inequality is currently on an upward trajectory, and that the low income group shows the strongest relationship between income inequality and entrepreneurship should be salient for policymakers attempting to spur job growth via entrepreneurship, as this group is more likely than their higher income counterparts to participate in self-employment instead of job-producing entrepreneurship. |
