Did 9/11 affect Hispanic‐Americans' self‐employment entry and exit decisions?

Purpose - The purpose of this paper is to examine the impact of the tragic events of 9/11 on the self‐employment entry/exit decisions of native‐born Hispanics. Design/methodology/approach - The paper uses the difference‐in‐differences approach with native Whites as the control group. The dynamics of entry and exit decisions are examined using data from 1999‐2003 CPS‐ORG. Findings - The estimates reveal a negative impact of 9/11 on Hispanics' self‐employment entry decisions, which is mainly the result of less entry from the wage sector, and it has increased Hispanics' self‐employment exit, which is mainly the result of increased exit to the wage sector. Research limitations/implications - The results suggest that native Hispanics may have experienced increased job opportunities in the wake of 9/11 and hence became less likely to be “pushed” into self‐employment and more likely to be “pulled” out of self‐employment. The improved labor market opportunities stem from government increased sanctions against undocumented immigrants, which reduced the demand for illegal immigrant workers, many of whom are Hispanic immigrants, and that native‐born Hispanics are likely to be relatively close substitutes for immigrants Hispanics. A limitation of the research is that the estimates are statistically insignificant, possibly due to the relatively small sample size. Originality/value - Existing studies that examine the impact of 9/11 on the Hispanic's labor market outcomes are all focused on immigrants or wage‐employment. The paper complements the literature by examining the impact of 9/11 on native‐born Hispanics and in particular their self‐employment decisions, and thus provides a more complete picture of the impact of 9/11 on Hispanics.