Community Determinants of Immigrant Self-Employment: Human Capital Spillovers and Ethnic Enclaves

45 Pages Posted: 17 Apr 2013

See all articles by Liliana Sousa

Liliana Sousa

U.S. Census Bureau - Center for Economic Studies

Date Written: April 01, 2013

Abstract

I find evidence that human capital spillovers have positive effects on the proclivity of low human capital immigrants to self-employ. Human capital spillovers within an ethnic community can increase the self-employment propensity of its members by decreasing the costs associated with starting and running a business (especially, transaction costs and information costs). Immigrants who do not speak English and those with little formal education are more likely to be self-employed if they reside in an ethnic community boasting higher human capital. On the other hand, the educational attainment of co-ethnics does not appear to affect the self-employment choices of immigrants with a post-secondary education to become self-employed. Further analysis suggests that immigrants in communities with more human capital choose industries that are more capital-intensive. Overall, the results suggest that the communities in which immigrants reside influences their self-employment decisions. For low-skilled immigrants who face high costs to learning English and/or acquiring more education, these human capital spillovers may serve as an alternative resource of information and labor mobility.

Suggested Citation

Sousa, Liliana, Community Determinants of Immigrant Self-Employment: Human Capital Spillovers and Ethnic Enclaves (April 01, 2013). US Census Bureau Center for Economic Studies Paper No. CES-WP-13-21. Available at SSRN: https://ssrn.com/abstract=2252169 or http://dx.doi.org/10.2139/ssrn.2252169

Liliana Sousa (Contact Author)

U.S. Census Bureau - Center for Economic Studies ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

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