Is Entrepreneurship a Channel of Social Mobility in Latin America?

FRANCESCA CASTELLANI, EDUARDO LORA
LATIN AMERICAN JOURNAL OF ECONOMICS 51.2 (2014): 179-194

This paper summarizes the findings in this special issue of the Latin American Journal of Economics on entrepreneurship’s role in upward social mobility in Latin America, especially for the middle class, often considered the cradle of entrepreneurship. The income-persistent coefficients estimated with pseudo-panel data for Colombia, Ecuador, and Uruguay indicate that entrepreneurship is a channel of intergenerational mobility, while asset persistence estimates for Mexico show that entrepreneurship increases mobility across generations. Although persistence coefficients do not indicate the direction of such mobility, estimates of income differentials between entrepreneurs and non-entrepreneurs for Ecuador and Mexico support the hypothesis that upward mobility dominates.