Fractionalization & Entrepreneurship : Does Cultural Diversity Increase the Rate of Entrepreneurial Activity?

In the economic development literature, cultural diversity has been shown to have a positive impact on economic outcomes. A culturally diverse society or interaction among different cultures encourages exchange and competition and generates efficient outcome. Our paper hypothesizes that a culturally diverse society has a positive impact on the rate of entrepreneurship. We show that in the United States, a country with good institutions, that cultural diversity or greater cultural capital has clear economic benefits - it increases the rate of entrepreneurship