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Social Networks, Ethnicity, and Entrepreneurship

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  • William R. Kerr
  • Martin Mandorff

Abstract

We study the relationship between ethnicity, occupational choice, and entrepreneurship. Immigrant groups in the United States cluster in specific business sectors. For example, the concentration of Korean self-employment in dry cleaners is 34 times greater than other immigrant groups, and Gujarati-speaking Indians are similarly 108 times more concentrated in managing motels. We develop a model of social interactions where non-work relationships facilitate the acquisition of sector-specific skills. The resulting scale economies generate occupational stratification along ethnic lines, consistent with the reoccurring phenomenon of small, socially-isolated groups achieving considerable economic success via concentrated entrepreneurship. Empirical evidence from the United States supports our model’s underlying mechanisms.

Suggested Citation

  • William R. Kerr & Martin Mandorff, 2016. "Social Networks, Ethnicity, and Entrepreneurship," CESifo Working Paper Series 6211, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6211
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    References listed on IDEAS

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    Cited by:

    1. Sari Pekkala Kerr & William R. Kerr, 2016. "Immigrant Entrepreneurship," NBER Chapters,in: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, pages 187-249 National Bureau of Economic Research, Inc.
    2. Matthew J. Lindquist & Joeri Sol & C. Mirjam van Praag & Theodor Vladasel, 2016. "On the Origins of Entrepreneurship: Evidence from Sibling Correlations," Tinbergen Institute Discussion Papers 16-077/VII, Tinbergen Institute, revised 12 Oct 2017.
    3. repec:kap:sbusec:v:49:y:2017:i:3:d:10.1007_s11187-017-9848-8 is not listed on IDEAS

    More about this item

    Keywords

    entrepreneurship; self-employed; occupation; ethnicity; immigration; networks;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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