Urbanization, Disadvantage, and Petty Entrepreneurship: Street Peddling among African American Men in Southern and Northern Cities during the Early Twentieth Century

Two theories attempt to explain why minority groups are often involved in small-scale entrepreneurial activities. The urban adjustment hypothesis holds that when such groups urbanize, their members establish themselves economically through self-employment in pursuits that require little start-up capital. The disadvantage theory argues that exclusion from the labor market impels members of oppressed groups to become self-employed in marginal enterprises. Applying these theories, I use census data to analyze the participation of African American men in street peddling during the pre-World War II era. Consistent with the urban adjustment hypothesis, the involvement of African American men in street peddling increased markedly when African Americans urbanized during the period from 1890 to 1940. Consistent with disadvantage theory, the involvement of African American men in street peddling was positively associated with labor market disadvantage. Finally, in southern cities, African American men were overrepresented in street peddling, a finding that suggests that these men had a niche in the petty-trading sector of the South's informal economy.