What is in a [poverty] label? The effect of regional poverty labeling in the Appalachian region of the U.S. and self-employment

Abstract

Extending the growing amount of literature on poverty and entrepreneurship, we draw on stereotype threat theory to test whether labels of regional poverty categories, controlling for regional GDP, influence engagement in self-employment. In using the county designations of at-risk, attainment, competitive, distress, or transitional provided by the Appalachian Regional Commission, the County Business Patterns, Business Dynamics Statistics, and Startup Cartography Project, we find no significant differences in regional entrepreneurial activity among labels. However, in the individual-level analysis using CPS-ASEC two-wave longitudinal data, the findings show that those residing in counties labeled as at-risk counties, relative to attainment counties, had lower odds of being self-employed. These findings at regional and individual levels show stereotype threat may not aggregate to the regional level, but may manifest at the individual level. The findings have implications for stereotype threat based on government-identified regional labels of relative economic standing.