Is entrepreneurship inherited? A study of intergenerational mobility in Mexico

Available from: 
October 2013
Paper author(s): 
Viviana Velez (IDB)
Topic: 
Labor
Year: 
2013

How does entrepreneurship affect social mobility in Mexico? In this paper, the Mexican Social Mobility Survey 2006 (MSMS-2006) is used to analyze intergenerational, i.e., respondents- parents, social mobility as it relates to entrepreneurial activity. Three main exercises are performed. First, the paper analyzes whether entrepreneurs experience greater upward social mobility than self-employed workers or employees. Second, probit models are estimated to identify the main determinants of the decision to become an entrepreneur. Third, using the propensity score matching method (PSM), the paper estimates the effect of entrepreneurial activity on income. Results show that entrepreneurs have more options for upward social mobility. For entrepreneurs with low-income parents, it is more difficult to reach the top of the socioeconomic distribution compared to those with middle- or upper-class parents. Second, the probability of becoming an entrepreneur increases where the respondent’s father was an entrepreneur. Finally, the mean effect of entrepreneurial activity on income is positive, and is greater for those whose parents belonged to the extreme ends of the socioeconomic distribution.

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Research section: 
Lacea 2013 annual meeting
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