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Racial Separation Influences on the Demography of Urban Small Firms

This study develops and estimates a model of residential segregation influences on demographic patterns in minority-owned firms. The prime hypothesis is that minority-owned firms in metropolitan areas with higher segregation will have a higher likelihood of hiring and servicing members of their own racial groups. Using data from the Multi-City Study of Urban Inequality (MCSUI), the paper's primary hypotheses were supported. Results show that diversity in a firm's workforce and customers varies inversely with the level of residential segregation in the area in which the firm is located.