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Reconsidering Immigrant Entrepreneurship —
Illegal Immigrants Because the Current Population Survey attempts to create a representative sample of the entire U.S. population, a significant number of illegal aliens show up in the survey. It is certainly possible that being in the country illegally creates some impediments to self-employment. Of course, since being self-employed may involve little more than being an unlicenced street vender, it may be that legal status has little or no effect on self-employment rates. Assuming that it does reduce self-employment, the inclusion of illegal aliens in the CPS may understate entrepreneurial activity for legal immigrants. While it is not possible to definitively distinguish legal immigrants from illegal aliens in the CPS, it is possible to look at immigrants who, because of their demographic characteristics, are unlikely to be in the country illegally. One way of doing this is to examine 1970s immigrants. Previous research indicates that by 1997 there where very few illegals among this group (Clark and Passel, 1998; Warren, 1999). Moreover, these immigrants have been in the United States for more than 20 years on average, so they are very familiar with the country. Tables 1 and 2 show that 1970s immigrants are very similar to natives in terms of self-employment. Immigrants who arrived in the 1970s do have somewhat higher self-employment rates 12.7 percent compared to 11.8 percent for natives. Even so, this modest immigrant advantage in self-employment may reflect the fact that 1970s immigrants are slightly older than natives on average. If we control for age, then the proportion of natives and 1970s immigrants who are entrepreneurs is almost identical. For example, 1970s immigrants between the ages of 45 and 54 have a self-employment rate of 13.1, almost exactly the same as the 13.3 percent for natives of the same age found in Table 3. In terms of part-time self-employment rates, as we have seen, natives enjoy a small advantage over 1970s immigrants of almost one percentage point. On the other hand, 1970s immigrants do have higher self-employment incomes than do natives. Turning to the number of employees, Table 2 shows that natives and 1970s immigrants are virtually indistinguishable from one another. All of the available evidence indicates that, in general, there are only very modest differences between 1970s immigrants and natives. Therefore, it seems unlikely that the presence of illegal aliens alters the overall findings in this report. It should also be noted that when evaluating the impact of immigration, it may be better to see legal and illegal immigration as closely linked and not as distinct phenomena; many illegal aliens come to the United States to join friends and relatives who are legal residents. Sociological research indicates that one of the primary factors influencing peoples' decisions to emigrate is whether a family member or person from their home community has already come to United States (Massey and Espinosa 1997; Palloni, Spittel and Ceballos 1999). Communities of recent legal immigrants serve as magnets for illegal immigration by providing housing, jobs, and entree to America. Analysis done by the Immigration and Naturalization Service indicates that one out of four legal immigrants who receives a green card in any given year is in fact an illegal alien already living in the country (INS press release, January 1999). Thus, it is probably more accurate to view illegal immigration as a direct consequence of large-scale legal immigration and not as a separate phenomenon that should be dealt with independently. If this is the correct interpretation, then it makes more sense not to separate out illegal aliens from legal immigrants, but instead to look at the characteristics of all immigrants as reflective of the nation's immigration policy in its totality.
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