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The Effect of Immigration on Native Self-Employment

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  • Robert W. Fairlie

    (University of California, Santa Cruz)

  • Bruce D. Meyer

    (Northwestern University and National Bureau of Economic Research)

Abstract

We examine the impact of immigration on self-employed natives. In a new general equilibrium model of self-employment and wage/salary work, a range of plausible parameter values implies small negative effects of immigration on native self-employment rates and earnings. Using 1980 and 1990 Census microdata, we then examine the relationship between changes in immigration and native self-employment rates and earnings across 132 of the largest U.S. metropolitan areas. We find evidence suggesting that self-employed immigrants displace self-employed natives but do not have a negative effect on native self-employment earnings. The effects are much larger than those predicted by the theoretical model.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 21 (2003)
Issue (Month): 3 (July)
Pages: 619-650

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Handle: RePEc:ucp:jlabec:v:21:y:2003:i:3:p:619-650

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  1. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
  2. Holtz-Eakin, D. & Joulfaian, D. & Rosen, H.S., 1992. "Entrepreneurial Decisions and Liquidity Constraints," Papers 129, Princeton, Department of Economics - Financial Research Center.
  3. Borjas, George J & Freeman, Richard B & Katz, Lawrence, 1996. "Searching for the Effect of Immigration on the Labor Market," American Economic Review, American Economic Association, vol. 86(2), pages 246-51, May.
  4. Devine, Theresa J, 1994. "Changes in Wage-and-Salary Returns to Skill and the Recent Rise in Female Self-Employment," American Economic Review, American Economic Association, vol. 84(2), pages 108-13, May.
  5. Robert W. Fairlie & Bruce D. Meyer, 1996. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 757-793.
  6. George J. Borjas, 1987. "Self-Selection and the Earnings of Immigrants," NBER Working Papers 2248, National Bureau of Economic Research, Inc.
  7. Borjas, George J. & Sueyoshi, Glenn T., 1994. "A two-stage estimator for probit models with structural group effects," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 165-182.
  8. Andrew M. Yuengert, 1995. "Testing Hypotheses of Immigrant Self-Employment," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 194-204.
  9. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  10. Bartel, Ann P, 1989. "Where Do the New U.S. Immigrants Live?," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 371-91, October.
  11. Robert W. Fairlie, 2000. "Earnings Growth among Young Less-Educated Business Owners," JCPR Working Papers 207, Northwestern University/University of Chicago Joint Center for Poverty Research.
  12. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
  13. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers 1942, National Bureau of Economic Research, Inc.
  14. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  15. David A. Jaeger & Susanna Loeb & Sarah E. Turner & John Bound, 1998. "Coding Geographic Areas Across Census Years: Creating Consistent Definitions of Metropolitan Areas," NBER Working Papers 6772, National Bureau of Economic Research, Inc.
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Cited by:
  1. Albert Saiz, 2003. "Immigration and housing rents in American cities," Working Papers 03-12, Federal Reserve Bank of Philadelphia.
  2. Baez, Javier E., 2008. "Civil Wars beyond their Borders: The Human Capital and Health Consequences of Hosting Refugees," IZA Discussion Papers 3468, Institute for the Study of Labor (IZA).
  3. Pylypchuk, Yuriy, 2009. "Effects of immigration on the health insurance status of natives," Journal of Health Economics, Elsevier, vol. 28(5), pages 1028-1037, September.
  4. Betz, William & Simpson, Nicole B., 2013. "The Effects of International Migration on the Well-Being of Native Populations in Europe," IZA Discussion Papers 7368, Institute for the Study of Labor (IZA).
  5. Minniti, Maria & Lévesque, Moren, 2008. "Recent developments in the economics of entrepreneurship," Journal of Business Venturing, Elsevier, vol. 23(6), pages 603-612, November.
  6. Bogan, Vicki & Darity Jr., William, 2008. "Culture and entrepreneurship? African American and immigrant self-employment in the United States," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 1999-2019, October.
  7. Tengeh, Robertson Khan & Ballard, Harry & Slabbert, Andre, 2011. "A framework for acquiring the resources vital for the start-up of a business in South Africa:an African Immigrant’s Perspective," MPRA Paper 34211, University Library of Munich, Germany.
  8. Fairlie, Robert W. & Woodruff, Christopher, 2006. "Mexican Entrepreneurship: A Comparison of Self-Employment in Mexico and the United States," IZA Discussion Papers 2039, Institute for the Study of Labor (IZA).
  9. Constant, Amelie F. & Shachmurove, Yochanan, 2003. "Entrepreneurial Ventures and Wage Differentials Between Germans and Immigrants," IZA Discussion Papers 879, Institute for the Study of Labor (IZA).

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