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

32 Pages Posted: 7 Jul 2012

See all articles by Harriet Orcutt Duleep

Harriet Orcutt Duleep

College of William & Mary - Policy School; IZA Institute of Labor Economics

David A. Jaeger

Ph.D. Program in Economics, City University of New York Graduate Center; National Bureau of Economic Research (NBER); University of Cologne - Department of Economics; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); University College London - CReAM - Centre for Research and Analysis of Migration

Mark C. Regets

National Foundation for America Policy; IZA Institute of Labor Economics; Global Labor Organization

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.

Keywords: immigration, innovation, entrepreneurship, human capital investment, skill transferability, opportunity cost, learning transferability

JEL Classification: J15, J24, J39, J61, L26

Suggested Citation

Duleep, Harriet Orcutt and Jaeger, David A. and Regets, Mark C., How Immigration May Affect U.S. Native Entrepreneurship: Theoretical Building Blocks and Preliminary Results. IZA Discussion Paper No. 6677. Available at SSRN: https://ssrn.com/abstract=2101944

Harriet Orcutt Duleep (Contact Author)

College of William & Mary - Policy School ( email )

P.O. Box 8795
Williamsburg, VA 23185
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

David A. Jaeger

Ph.D. Program in Economics, City University of New York Graduate Center ( email )

NBER
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New York, NY 10004
United States

HOME PAGE: http://www.djaeger.org

National Bureau of Economic Research (NBER) ( email )

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University of Cologne - Department of Economics ( email )

Cologne, 50923
Germany

IZA Institute of Labor Economics

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Germany

HOME PAGE: http://www.iza.org

CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Germany

University College London - CReAM - Centre for Research and Analysis of Migration ( email )

Drayton House
30 Gordon Street
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United Kingdom

Mark C. Regets

National Foundation for America Policy ( email )

2111 Wilson Blvd.
Suite 700
Arlington, VA 22201
United States
571-275-9218 (Phone)

HOME PAGE: http://www.nfap.com

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Global Labor Organization ( email )

Collogne
Germany

HOME PAGE: http://www.glabor.org

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