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preferences for autonomy or self-employment, or similarities in other personal

characteristics that are associated with self-employment, such as entrepreneurial ability

and attitudes towards risk (Fairlie 2002).

The CBO provides detailed information on family business experience and

business inheritances that allows us to provide some suggestive evidence on the

importance of these factors. Table 1 reports the percentage of small business owners that

had a family member who was a business owner, the percentage of owners that worked

for that family member, and other measures related to family business background.9

More than half of all business owners had a self-employed family member prior to

starting their business. Conditional on having a self-employed family member, nearly

half of small business owners worked in that family member's business. Overall, 22.5

percent of small business owners worked in a family business prior to starting or

acquiring their business.10

The finding that more than 50 percent of all small business owners had a family

member who was a self-employed business owner is nearly identical to the 52.2 percent

of independent businessmen from the NFIB that had parents who were business owners

(Lentz and Laband 1990). Although we do not have a comparison group of non-business

owners and family members may include spouses and siblings in addition to parents, the

finding that half of business owners have a self-employed family member suggests a high

9 The questions ask (1) "Prior to beginning/acquiring this business, had any of your close relatives ever owned a business OR been self-employed? (Close relatives refer to spouses, parents/guardians, brothers, sisters, or immediate family)", and (2) "If "Yes," did you work for any of these relatives?" U.S. Department of Commerce (1997, p. C-4).

10 A recent survey of small employer firms by the NFIB, indicates that 45.1 percent of businesses employ a family member. They use a broader definition of family members than in the CBO and only include firms with 1-249 employees, however (National Federation of Independent Business 2002).

7

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