Immigration and rates of entrepreneurship in large US communities

ABSTRACT

Using US county-level data from the Business Information Tracking System, we revisit the influence of immigrants on business start-ups. We find that a higher density of foreign-born immigrants has a positive impact on new business formation, but the relationship varies by the ethnic background of the immigrants and by industry type. Specifically, Caucasian immigrants, and to a lesser extent Asians, drive the positive relationship. Higher concentrations of Latinx immigrants, however, have either no or a predominantly negative influence on business start-up rates. The largely positive relationship between foreign-born and entrepreneurship varies significantly across different industries, particularly for Asians and Latinx. Care must be taken when making broad generalizations about the immigrant and entrepreneurship relationship. Specifically, there are significant variations across ethnic backgrounds and types of industries.

KEYWORDS:

• Immigrants
• foreign-born
• entrepreneurship
• business start-ups

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. GEM began in 1999 as a joint project between Babson College (USA) and London Business School (UK). The aim was to consider why some countries are more ”entrepreneurial” than others. Details can be found at: https://www.gemconsortium.org/.

2. These two extreme views of immigrant entrepreneurs are intended to provide insights into the potential spectrum of immigrant entrepreneurs and not intended to reflect the blending of these two extremes.

3. For a much more detailed discussion of the insights on immigrants and entrepreneurship using the micro Survey of Business Owners data see Kerr and Kerr (2020).

4. While these three classifications may appear narrow, finer classification reduced the variation within the data, thus weakening the statistical strength of our modeling. For example, the concentrations of immigrants self-reporting as from Africa was small and highly concentrated in a few places (counties), thus weakening the statistical robustness of the results.

5. With a neoclassical framework, regardless of the stylized complexity, any increase in the supply of labor will place downward pressure on wages.

6. The data used to construct the social capital measure are available here: https://aese.psu.edu/nercrd/community/social-capital-resources.

Additional information

Funding

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