Immigration Causes American Businesses to Fail and that is a Good Thing

Journal of Entrepreneurship and Public Policy 5, no. 1: 63-72, 2016

15 Pages Posted: 18 Sep 2014 Last revised: 4 May 2016

See all articles by Ryan Murphy

Ryan Murphy

Southern Methodist University (SMU)

Rick Weber

Farmingdale State College

Date Written: September 16, 2014

Abstract

Though counterintuitive, rates of business failure are effective proxies for entrepreneurship. We find that the foreign born population within US states is predictive of business failure ten years later. A one standard deviation increase in foreign born population corresponds to a 1.09 standard deviation increase in entrepreneurship thusly measured. We argue this is evidence that immigration leads to entrepreneurship and economic growth.

The importance of entrepreneurship to economic growth is widely accepted. The role of immigration is more controversial. Concerns over potential costs of immigrants are making headlines in the popular press (Tumulty and Costa 2014; Debenedetti 2014) and some of the scholarly literature (Collier 2012; Borjas 2014). Most prominently, discussions of immigration center on its effects on labor markets and more recently, institutional quality. Less attention is given to their impact on entrepreneurship.

Keywords: Immigration, Entrepreneurship, Business Failure

JEL Classification: F22, L26, R11

Suggested Citation

Murphy, Ryan and Weber, Rick, Immigration Causes American Businesses to Fail and that is a Good Thing (September 16, 2014). Journal of Entrepreneurship and Public Policy 5, no. 1: 63-72, 2016. Available at SSRN: https://ssrn.com/abstract=2497215 or http://dx.doi.org/10.2139/ssrn.2497215

Ryan Murphy (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

Rick Weber

Farmingdale State College ( email )

NY
United States
6317946102 (Phone)

HOME PAGE: http://www.rick-weber.com

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