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The Effect of Immigration on Native Self-Employment

  • Robert W. Fairlie

    (University of California, Santa Cruz)

  • Bruce D. Meyer

    (Northwestern University and National Bureau of Economic Research)

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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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. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  2. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1996. "Searching for the Effect of Immigration on the Labor Market," NBER Working Papers 5454, National Bureau of Economic Research, Inc.
  3. 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.
  4. 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.
  5. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
  6. 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.
  7. Holtz-Eakin, D. & Joulfaian, D. & Rosen, H.S., 1992. "Entrepreneurial Decisions and Liquidity Constraints," Papers 129, Princeton, Department of Economics - Financial Research Center.
  8. 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.
  9. Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
  10. George J. Borjas, 1987. "Self-Selection and the Earnings of Immigrants," NBER Working Papers 2248, National Bureau of Economic Research, Inc.
  11. 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.
  12. 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.
  13. Andrew M. Yuengert, 1995. "Testing Hypotheses of Immigrant Self-Employment," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 194-204.
  14. 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.
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