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Self-Employment Differentials among Foreign-Born STEM and Non-STEM Workers

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  • Cai, Zhengyu

    () (Southwestern University of Finance and Economics)

  • Winters, John V.

    () (Oklahoma State University)

Abstract

This paper uses the American Community Survey to examine the previously overlooked fact that foreign STEM (science, technology, engineering, and mathematics) graduates have much lower self-employment rates than their non-STEM counterparts, with an unconditional difference of 3.3 percentage points. We find empirical support for differing earnings opportunities as a partial explanation for this self-employment gap. High wages in STEM paid-employment combined with reduced earnings in self-employment make self-employment less desirable for STEM graduates. High self-employment rates among other foreign-born workers partially reflect weak paid-employment opportunities. Public policy should encourage efficient use of worker skills rather than low-value business venture creation.

Suggested Citation

  • Cai, Zhengyu & Winters, John V., 2017. "Self-Employment Differentials among Foreign-Born STEM and Non-STEM Workers," IZA Discussion Papers 10688, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10688
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    More about this item

    Keywords

    self-employment; immigration; foreign-born; college major; STEM; earnings;

    JEL classification:

    • 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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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