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How Immigration May Affect U.S. Native Entrepreneurship: Theoretical Building Blocks and Preliminary Results

Author

Listed:
  • Duleep, Harriet

    (College of William and Mary)

  • Jaeger, David A.

    (University of St. Andrews)

  • Regets, Mark

    (National Foundation for American Policy)

Abstract

This paper describes the theoretical underpinnings and provides empirical evidence for a model that predicts a positive impact of immigration on entrepreneurial activity. Immigrants, we hypothesize, facilitate innovation and entrepreneurship by being willing and able to invest in new skills. At the heart of this theoretical prediction is the observation that human capital not immediately valued in the U.S. labor market is useful for learning new skills. Because immigrants face a lower opportunity cost of investing in new skills or methods, this "transfer" of source-specific skills to the U.S. may lead immigrants to be more flexible in their human capital investments than observationally equivalent natives. Areas with large numbers of immigrants (even if they are not self-employed) may prove to be areas in which entrepreneurship and innovation are easier to accomplish. Our theory offers a unique perspective on the contributions of immigrants to economic development beyond traditional perspectives that focus on low-cost immigrant labor or immigrant entrepreneurship.

Suggested Citation

  • Duleep, Harriet & Jaeger, David A. & Regets, Mark, 2012. "How Immigration May Affect U.S. Native Entrepreneurship: Theoretical Building Blocks and Preliminary Results," IZA Discussion Papers 6677, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6677
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    References listed on IDEAS

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    1. Harriet Duleep & Daniel Dowhan, 2002. "Insights from longitudinal data on the earnings growth of U.S. foreign-born men," Demography, Springer;Population Association of America (PAA), vol. 39(3), pages 485-506, August.
    2. David A. Jaeger, 2007. "Green Cards and the Location Choices of Immigrants in the United States, 1971–2000," Research in Labor Economics, in: Immigration, pages 131-183, Emerald Group Publishing Limited.
    3. Green, David A, 1999. "Immigrant Occupational Attainment: Assimilation and Mobility over Time," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 49-79, January.
    4. Jennifer Hunt & Marjolaine Gauthier-Loiselle, 2010. "How Much Does Immigration Boost Innovation?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 31-56, April.
    5. Robert W. Fairlie & Christopher Woodruff, 2007. "Mexican Entrepreneurship: A Comparison of Self-Employment in Mexico and the United States," NBER Chapters, in: Mexican Immigration to the United States, pages 123-158, National Bureau of Economic Research, Inc.
    6. Timothy Bates, 1993. "Determinants Of Survival And Profiability Among Asian Immigrant-Owned Small Businesses," Working Papers 93-11, Center for Economic Studies, U.S. Census Bureau.
    7. Gnanaraj Chellaraj & Keith E. Maskus & Aaditya Mattoo, 2008. "The Contribution of International Graduate Students to US Innovation," Review of International Economics, Wiley Blackwell, vol. 16(3), pages 444-462, August.
    8. William Fellner, 1979. "Contemporary Economic Problems, 1979," Books, American Enterprise Institute, number 918293, September.
    9. Harriet Duleep & Mark Regets, 1997. "Measuring immigrant wage growth using matched CPS files," Demography, Springer;Population Association of America (PAA), vol. 34(2), pages 239-249, May.
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    Cited by:

    1. Nathan, Max, 2013. "The Wider Economic Impacts of High-Skilled Migrants: A Survey of the Literature," IZA Discussion Papers 7653, Institute of Labor Economics (IZA).
    2. Max Nathan, 2014. "The wider economic impacts of high-skilled migrants: a survey of the literature for receiving countries," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-20, December.
    3. Khanh Hoang, 2015. "Aiding innovation and entrepreneurship through migration policy: A view from Australia," International Journal of Social Sciences, International Institute of Social and Economic Sciences, vol. 4(3), pages 59-81, August.
    4. Dr Max Nathan, 2013. "The wider economic impacts of high-skilled migrants: a survey of the literature," National Institute of Economic and Social Research (NIESR) Discussion Papers 413, National Institute of Economic and Social Research.
    5. Harriet Duleep & Mark Regets, 2017. "Family-friendly and human-capital-based immigration policy," IZA World of Labor, Institute of Labor Economics (IZA), pages 389-389, October.
    6. Ghimire Keshar M., 2021. "Supply of immigrant entrepreneurs and native entrepreneurship," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-42, January.
    7. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    8. Bonin, Holger, 2017. "The Potential Economic Benefits of Education of Migrants in the EU," IZA Research Reports 75, Institute of Labor Economics (IZA).
    9. Byeongwoo Kang & Kaoru Nabeshima, 2021. "National origin diversity and innovation performance: the case of Japan," Scientometrics, Springer;Akadémiai Kiadó, vol. 126(6), pages 5333-5351, June.

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    More about this item

    Keywords

    immigration; innovation; entrepreneurship; human capital investment; skill transferability; opportunity cost; learning transferability;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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