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Labor Market Assimilation and the Self-Employment Decision of Immigrant Entrepreneurs

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Author Info
Lofstrom, Magnus () (IZA, Bonn)

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Abstract

This paper uses data from the 1980 and 1990 U.S. Censuses to study labor market assimilation of self-employed immigrants. Separate earnings functions for the self-employed and wage/salary workers are estimated. To control for endogenous sorting into the sectors, models of the self-employment decision are estimated. Variables for the proportion of immigrants in the population and average earnings ratios are used as instruments to control for self-selection into self-employment and consequently identify the inverse Mills correction term in the earnings models. Self-employed immigrants do substantially better in the labor market than wage/salary immigrants. Earnings of self-employed immigrants are predicted to converge with natives' wage/salary earnings at about age 30 and natives' self-employed earnings at about age 40. Including the self-employed in the sample reduces the immigrant-native earnings gap by, on average, roughly 14 percent.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 54.

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Length: 34 pages
Date of creation: Aug 1999
Date of revision:
Handle: RePEc:iza:izadps:dp54

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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Related research
Keywords: Immigration; assimilation; self-employment;

Other versions of this item:

Find related papers by JEL classification:
J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Borjas, George J & Bronars, Stephen G, 1991. "Immigration and the Family," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 123-48, April. [Downloadable!] (restricted)
    Other versions:
  2. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers 1942, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October. [Downloadable!] (restricted)
  4. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-89, October. [Downloadable!] (restricted)
  5. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December. [Downloadable!] (restricted)
  6. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June. [Downloadable!] (restricted)
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  7. Robert W. Fairlie & Bruce D. Meyer, 1994. "The Ethnic and Racial Character of Self-Employment," NBER Working Papers 4791, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-53, September. [Downloadable!] (restricted)
    Other versions:
  9. Carliner, Geoffrey, 1980. "Wages, Earnings and Hours of First, Second, and Third Generation American Males," Economic Inquiry, Oxford University Press, vol. 18(1), pages 87-102, January.
  10. Julian R. Betts & Magnus Lofstrom, 1998. "The Educational Attainment of Immigrants: Trends and Implications," NBER Working Papers 6757, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Constant, Amelie & Zimmermann, Klaus F., 2004. "The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?," IZA Discussion Papers 1440, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Lofstrom, Magnus, 2000. "A Comparison of the Human Capital and Signaling Models: The Case of the Self-Employed and the Increase in the Schooling Premium in the 1980's," IZA Discussion Papers 160, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Constant, Amelie & Shachmurove, Yochanan, 2003. "Entrepreneurial Ventures and Wage Differentials Between Germans and Immigrants," IZA Discussion Papers 879, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Jan Fidrmuc & Orla Doyle, 2004. "Voice of the Diaspora: An Analysis of Migrant Voting Behavior," William Davidson Institute Working Papers Series 2004-714, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  5. Justin van der Sluis & Mirjam van Praag & Arjen van Witteloostuijn, 2004. "Comparing the Returns to Education for Entrepreneurs and Employees," Tinbergen Institute Discussion Papers 04-104/3, Tinbergen Institute. [Downloadable!]
  6. Amelie Constant & Yochanan Shachmurove & Klaus F. Zimmermann, 2003. "What Makes an Entrepreneur and Does It Pay?: Native Men, Turks, and Other Migrants in Germany," Discussion Papers of DIW Berlin 386, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  7. Lofstrom, Magnus, 2000. "Self-Employment and Earnings among High-Skilled Immigrants in the United States," IZA Discussion Papers 175, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Maude Toussaint-Comeau, 2005. "Do enclaves matter in immigrants’ self-employment decision?," Working Paper Series WP-05-23, Federal Reserve Bank of Chicago. [Downloadable!]
  9. Robert W. Fairlie & Christopher Woodruff, 2008. "Mexican-American Entrepreneurship," CEPR Discussion Papers 575, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  10. Magnus Lofstrom & Chunbei Wang, 2006. "Hispanic Self-Employment: A Dynamic Analysis of Business Ownership," IZA Discussion Papers 2101, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Mats Hammarstedt, 2006. "The predicted earnings differential and immigrant self-employment in Sweden," Applied Economics, Taylor and Francis Journals, vol. 38(6), pages 619-630, April. [Downloadable!] (restricted)
  12. Constant, Amelie F., 2008. "Businesswomen in Germany and Their Performance by Ethnicity: It Pays to Be Self-Employed," IZA Discussion Papers 3644, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  13. Amelie Constant & Yochanan Shachmurove, 2005. "The comparison of incomes of self-employed and salaried workers among German Nationals and immigrants," PIER Working Paper Archive 05-030, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania. [Downloadable!]
  14. Robert W. Fairlie & Julie Zissimopoulos & Harry Krashinsky, 2008. "The International Asian Business Success Story? A Comparison of Chinese, Indian and Other Asian Businesses in the United States, Canada and United Kingdom," NBER Chapters, in: International Differences in Entrepreneurship National Bureau of Economic Research, Inc. [Downloadable!]
  15. Epstein, Gil S. & Gang, Ira N., 2004. "Ethnic Networks and International Trade," IZA Discussion Papers 1232, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  16. Francesca Mazzolari, 2007. "Dual Citizenship Rights: Do They Make More and Better Citizens?," IZA Discussion Papers 3008, Institute for the Study of Labor (IZA). [Downloadable!]
  17. Constant, Amelie, 2004. "Immigrant versus Native Businesswomen: Proclivity and Performance," IZA Discussion Papers 1234, Institute for the Study of Labor (IZA). [Downloadable!]
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