Immigration and Entrepreneurship: The Role of Enclaves
74 Pages Posted: 24 Mar 2020
Date Written: July 1, 2019
The link between immigration and entrepreneurship depends on the relationship between the job market for immigrants and the returns from being an entrepreneur. In investigating the impact of immigration on entrepreneurship, this study focuses on how the presence of enclaves alters this relationship, by using a novel dataset of incorporations in Great Britain that includes information on founders’ nationality. Taking advantage of the accession of Poland to the European Union in 2004, which led to an unprecedented migration wave in Great Britain, I adopt different instrumental variable strategies to address endogeneity of enclaves and immigration flows. These include the presence of historical Polish military settlements and a Bartik-style instrument considering the historical occupational composition and the growth of Polish immigration in Ireland. The results indicate that immigration generally increases immigrant entrepreneurship, but this does not hold in existing immigrant enclaves. The paper proceeds to investigate some possible mechanisms that might explain the result.
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