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level of intergenerational transmission of business ownership.11 The percent of owners

that had a self-employed family member prior to business startup certainly overstates the

percent of owners that had a self-employed parent, but the discrepancy may not be that

large. The strong positive influence of parental self-employment is common to brothers

suggesting that a propensity for business ownership runs in families (Dunn and Holtz-

Eakin 2000), and the question on the CBO asks whether the owner had a self-employed

family member prior to starting his/her business limiting the likelihood that older siblings

are referring to younger self-employed siblings. Furthermore, estimates from the 2002

Current Population Survey indicate that the average probability of having a self-

employed spouse among all self-employed business owners is only 24 percent. We

suspect that a large percentage of affirmative responses to the CBO question on whether

the owner had a self-employed family member prior to starting his/her business refer to

the owner's parents.

Another interesting finding is that more than half of all business owners who have

a self-employed family member did not work for that family member's business. This

finding suggests that intergenerational links in self-employment are not solely due to the

acquisition of general and specific business capital and that similarities across family

members in entrepreneurial preferences may explain part of the relationship. Using data

from the National Longitudinal Survey (NLS), however, Dunn and Holtz-Eakin (2000)

find that the intergenerational correlation in self-employment is strongest for successfully

self-employed parents suggesting that the transmission of business skills instead of

11 Making the conservative assumption that 25 percent of small business owners have a self- employed parent and a steady-state self-employment rate of 10 percent, the children of self- employed parents are 3 times more likely to be self-employed than are the children of non-self- employed parents.

8

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