The relationship between ethnic diversity, entrepreneurship and top 1 percent income inequality between United States of America and Finland

Abstract

The thesis studied ethnic diversity’s relationships with the three variables: entrepreneurship, income inequality and interest rate. This research has been carried out using a benchmark for 18 other selected OECD countries by comparing Finland with the United States of America. This paper’s primary aim is to analyse empirically the relation between ethnic diversity of entrepreneurship and income inequality. For two countries on the OECD list of high-income (United States of America and Finland) over a period of 16 years, we use a random-effects panel data analysis. The results of estimates and diagnostic analyses suggest that: (1) the existence of a combined relationship between entrepreneurship, ethnic diversity and income inequality supported by the hypothesis of the Kuznets curve is strongly supported. (II) Increased by economic development levels of the country, but positive for revenues held by the top 1 percent of people, the relation between entrepreneurship and income inequality is negative; (iii) regardless of income inequality levels, entrepreneurship has a combined linear relationship on the control parameters. For example, while the impact of unemployment on entrepreneurship is significantly negative, GDP is positive and significant. (iv) the gross proxy on investment capital formation has considerable positive effects on the entrepreneurial sector; (v) significant mixed impacts of governance, accountability, education quality of education, the expected lifetime and other competitive variables on the likelihood of enterprise activity are respected.