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Previous research suggests that inefficiencies in the small business market exist surrounding the availability of capital by Small and Microenterprises (SMMEs). Using data from the 1992 Characteristics of Business Owners Survey (CBO), the 2002 Survey of Business Owners (SBO), and the 2003 Survey of Small Business Finance (SSBF) this paper empirically estimates the "capital gap"- that is the unmet capital demand for business by SMMEs. We find that there is in fact a capital gap as the supply of capital available in the SMME market is not large enough to meet market demand. Given the importance of small businesses to economic vitality, growth, and recovery of the United States economy, the research provides critical and timely findings for policymakers and public finance managers seeking economic development and recovery

A proposed explanation for why business creation is often found to increase in recessions is that there are two components to entrepreneurship – “opportunity” and “necessity” – the latter of which is mostly counter-cyclical. Although there is some agreement on the conceptual distinction between these two factors driving entrepreneurship, there is little consensus in the literature on empirical definitions. The goal of this chapter is to propose an operational definition of opportunity versus necessity entrepreneurship based on the entrepreneur's prior work status (i.e., based on previous unemployment) that is straightforward, based on objective information, and empirically feasible using many large, nationally representative datasets. We then explore the validity of the definitions with theory and empirical evidence. Using datasets from the United States and Germany, we find that 80–90% of entrepreneurs are opportunity entrepreneurs. Applying our proposed definitions, we document that opportunity entrepreneurship is generally pro-cyclical and necessity entrepreneurship is strongly counter-cyclical both at the national levels and across local economic conditions. We also find that opportunity vs necessity entrepreneurship is associated with the creation of more growth-oriented businesses. The operational definitions of opportunity and necessity entrepreneurship proposed here may be useful for distinguishing between the two types of entrepreneurship in future research.

Indian immigrants in the United States and other wealthy countries are successful in entrepreneurship. Using Census data from the three largest developed countries receiving Indian immigrants in the world – the United States, the United Kingdom, and Canada – we examine the performance of Indian entrepreneurs and explanations for their success. We find that business income of Indian entrepreneurs in the United States is substantially higher than the national average and is higher than for any other immigrant group. Approximately half of the average difference in income between Indian entrepreneurs and the national average is explained by their high levels of education while industry differences explain an additional 10 percent. In Canada, Indian entrepreneurs have average earnings slightly below the national average but are more likely to hire employees, as are their counterparts in the United States and the United Kingdom. The Indian educational advantage is smaller in Canada and the United Kingdom, contributing less to their entrepreneurial success.

Using matched data from the 1996 to 2004 Current Population Survey (CPS), we examine racial patterns in annual transitions into and out of health insurance coverage. We first decompose racial differences in static health insurance coverage rates into group differences in transition rates into and out of health insurance coverage. The low rate of health insurance coverage among African-Americans is due almost entirely to higher annual rates of losing health insurance than whites. Among the uninsured, African-Americans have similar rates of gaining health insurance in the following year as whites. Estimates from the matched CPS also indicate that the lower rate of health insurance coverage among Asians is almost entirely accounted for by a relatively high rate of losing health insurance. In contrast to these findings, differences in health insurance coverage between Latinos and whites are due to group differences in both the rate of health insurance loss and gain. Using logit regression estimates, we also calculate nonlinear decompositions for the racial gaps in health insurance loss and gain. We find that two main factors are responsible for differences in health insurance loss between working-age whites and minorities: job loss and education level. Higher rates of job loss account for 30 percent of the health insurance gap for African-Americans and Asians, and 16 percent of the health insurance gap for Latinos. Lower levels of education explain roughly 15 percent of the gap for African-Americans and Latinos (Asians' higher levels of education serve to close the gap). Higher rates of welfare and SSI participation among African-Americans also serve to widen the gap in health insurance loss by 8 percent.

Pay varies across individuals. Some variation is endemic to a country's institutions including a country's level of development and its technological infrastructure. Some variation is based on differences in individual attributes, particularly an individual's ability to acquire human capital. Finally, some variation is based on incentives instigated by the government, by one's employer, or by one's family. These incentives often operate indirectly by influencing educational choices, labor force participation, and even cohabitation and marital arrangements. This volume contains eight articles on aspects of the distribution of income. One deals with technology change and the distribution of earnings, two deal with internal labor markets, four deal with incentives that motivate work related behavior, and finally one deals with immigrant labor market success.

Labor force transitions are empirically examined using Current Population Survey (CPS) data matched across months from 1996 to 2012 for Hispanics, African-Americans, and whites. Transition probabilities are contrasted prior to the Great Recession and afterward. Estimates indicate that minorities are more likely to be fired as business cycle conditions worsen. Estimates also show that minorities are usually more likely to be hired when business cycle conditions are weak. During the Great Recession, the odds of losing a job increased for minorities although cyclical sensitivity of the transition declined. Odds of becoming re-employed declined dramatically for blacks, by 2–4%, while the probability was unchanged for Hispanics.