The relationship between small business ownership and wealth looms large in the imagination of policymakers and entrepreneurs alike. Indeed, people who own businesses are wealthier than those who do not. In 2019, the median net worth of self-employed families was $380,000—over four times larger than the $90,000 in net worth held by the typical working family (Headd 2021). Perhaps for this reason, thousands of people every year decide to start a business, though a similar number of businesses exit each year as well. A key question for policymakers is the extent to which business ownership itself is responsible for this difference in wealth.
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