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Reconsidering Immigrant Entrepreneurship —
Conclusion There is an unfortunate tendency among proponents of high immigration on the one hand and those favoring lower levels of immigration on the other hand to exaggerate the attributes of immigrants. In the case of entrepreneurship, the findings of this report indicate that the arguments made by the advocates of high immigration about immigrant entrepreneurship are simply not supported by the available data. While at one time immigrants do seem to have been significantly more entrepreneurial than natives, since 1980 there is little difference between immigrants and natives. In fact, in 1997, the full-time self-employment rate of natives of 11.8 percent was slightly higher than the 11.3 percent for immigrants. Detailed comparisons of immigrants and natives in 1997 show that they are remarkably similar not only in their full-time self-employment rates but also in terms of their part-time self-employment rates, self-employment income, and in the number of workers they employ. Immigrant and native entrepreneurs are also distributed across industries in a very similar manner. Thus, immigrant entrepreneurs are not likely to change significantly the mix of businesses operating in the country. Equally important, there is no indication that the presence of immigrants has any effect on the overall level of entrepreneurship in the nation's central cities. The self-employment rates of immigrants and natives in the central cities of the nation's metropolitan areas are exactly the same 10.3 percent. Thus, the often-heard argument that immigrants are revitalizing America's inter-cities by starting new businesses at rates unmatched by natives is simply not supported by the evidence examined in this report. Although immigrants as a group cannot be described as "highly entrepreneurial," immigrants from some countries and regions of the world are more entrepreneurial than do natives. In particular, immigrants from the Middle East, Europe, Korea, Canada, and Cuba have much higher self-employment rates and incomes than natives. High levels of self-employment for immigrants from some countries may also partly explain why the perception exists that immigrants as a group are uniquely entrepreneurial. Elevated levels of entrepreneurship may be falsely attributed to all immigrants. It is possible that immigrants are significantly more entrepreneurial than natives, but Census Bureau data cannot be used to discern the differences. It is, however, difficult to imagine a scenario in which immigrants are much more entrepreneurial than natives without showing up in significantly higher full- or part-time self-employment rates, self-employment income, or in terms of workers employed. If immigrants were more entrepreneurial than natives, then some differences should emerge from the data. Analysis of Census data is certainly capable of showing such differences. Korea, Canadian, and Middle Eastern immigrants were found to have much higher self-employment rates and incomes than natives. The fact that the data are able to show significant differences should give us some confidence in the overall conclusion of this report that differences in entrepreneurship between immigrants and natives are small. These results are not inconsistent with previous scholarly work. In its extensive study of the impact of immigration on the United States, the National Research Council touched only very briefly on immigrant entrepreneurship. After examining the evidence, however, the report did conclude that, "it is difficult to argue that self-employment and any entrepreneurship associated with it mark a critical distinction between immigrants and the native-born." (Edmonston and Smith 1997, 162.) All the evidence examined in this report certainly supports this conclusion. Policy Implications Because immigration does not have a significant effect on entrepreneurship in the United States, the implications of this report are clear: Policy makers and those engaged in the immigration debate should focus on other areas where immigration actually does have a significant effect on the United States. For example, research indicates that by increasing the supply of unskilled labor, immigration drives down wages for low-wage natives. This in turn should generate higher returns on investment for owners of capital, and higher wages for more skilled workers who can now be paid more. Concern for the working poor on the one hand or the interests of businesses on other should be one area of focus for policy makers. Immigration policy has also become the determinate factor in driving population growth in the United States. Census Bureaus projections indicate that immigration at the current level will add 80 million residents to the United States by 2050 (Spencer 1996). Some argue that population growth is always desirable because it creates more opportunities for businesses and consumers, while others are concerned about the congestion, pollution, and suburban sprawl that comes with increases in population. Whatever one's views on population growth, it is clear that immigration has a profound effect on the size of the U.S. population. Immigration also has a significant impact on schools and public coffers as well as important cultural implications. All of these issues as well others should be carefully considered by policy makers and voters when determining the desirable level of immigration. Entrepreneurship, on the other hand, should simply be removed from the current immigration debate because it is one area where immigrants have little or no impact.
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