Indigenous Entrepreneurship and Income Gaps: Evidence from Mexico 2024

Communities that have been structurally and historically marginalized continue to face barriers rooted in practices of exclusion and segregation. These structural constraints often persist within the entrepreneurial sphere, limiting opportunities for Indigenous entrepreneurs to establish and consolidate their businesses. This study examines the sales gap between Indigenous entrepreneurs (IEs) and non-Indigenous entrepreneurs (NIEs) in Mexico. The analysis employs a dual methodological approach based on Oaxaca–Blinder (OB) mean decompositions and recentered influence function (RIF) regressions applied across income deciles. Findings reveal a persistent and significant sales disparity: on average, Indigenous entrepreneurs sell 42.5% less than their non-Indigenous counterparts. Approximately 18% of this difference is explained by observable characteristics such as education and experience, 20.8% by differences in returns to these characteristics, and 5.8% by interaction effects. By distinguishing between gaps driven by endowment differentials and those arising from differential returns, the study highlights the potential role of structural or discriminatory mechanisms underpinning Indigenous disadvantage in the Mexican entrepreneurial ecosystem.