Skilled and Unskilled Immigrants and Entrepreneurship in a Developed Country

17 Pages Posted: 16 Jul 2015

See all articles by Hamid Beladi

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics

Saibal Kar

Centre for Studies in Social Sciences, Calcutta; Institute of Labor Economics (IZA)

Date Written: August 2015

Abstract

Evidence from some OECD countries suggests that skilled immigrants are over‐represented in entrepreneurship. We offer an analytical explanation to show that it may be a direct outcome of asymmetric information between immigrants and potential employers in the rich countries. Limiting occupational choices to self‐employment and employment, we show that skilled immigrants vis‐à‐vis natives may be proportionally over‐represented in small businesses. This compensates for the income loss in the labor market. It results from higher critical risk aversion among skilled immigrants compared with natives and subsequently leads to higher average income for all immigrants in the cross‐section. Finally, we show why a lesser number of unskilled immigrants enter self‐employment and discuss the speed of income convergence between all immigrants and natives.

Suggested Citation

Beladi, Hamid and Kar, Saibal, Skilled and Unskilled Immigrants and Entrepreneurship in a Developed Country (August 2015). Review of Development Economics, Vol. 19, Issue 3, pp. 666-682, 2015. Available at SSRN: https://ssrn.com/abstract=2631272 or http://dx.doi.org/10.1111/rode.12155

Hamid Beladi (Contact Author)

University of Texas at San Antonio - College of Business - Department of Economics ( email )

One UTSA Circle
P.O. Box 5636
San Antonio, TX 78249
United States
210-458-7038 (Phone)
210-458-7040 (Fax)

Saibal Kar

Centre for Studies in Social Sciences, Calcutta ( email )

R-1, Baishnabghata Patuli Township
Calcutta, 700 094
India
91-33-2462 7252 (Phone)
91-33-2462 6183 (Fax)

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

Institute of Labor Economics (IZA) ( email )

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

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