The effect of small business entrepreneurship on poverty: Evidence from US rural counties

Small businesses are generally considered important for poverty alleviation. Existing literature on the relationship between entrepreneurship and poverty is focused mainly on urban communities. This study contributes to the literature by examining the effect of small business entrepreneurship on poverty rates across 604 US rural counties for the period 2010 to 2012. Our empirical results show that entrepreneurial activity employing less than 20 workers (0 to 19) is associated with lower poverty rates across the rural counties. Findings on businesses that employ 20 to 99 workers did not appear to affect poverty during the study period. The results suggest that microenterprises play an important role in alleviating poverty in rural US counties.