Immigrant Entrepreneurs in 272 SMSAs

Utilizing data collected from the 1980 public-use sample of the U.S. Census, we examine the effect of percentage foreign born in the labor force upon aggregate self-employment rate in 272 SMSAs. Because mean self-employment among the foreign born was higher than among the native born, an increased percentage in the foreign born in a SMSA labor force caused increased aggregate self-employment. Also, as a result of renewed immigration during the 1970s, and the resulting increase in the foreign-born component of the civilian labor force, nonfarm self-employment in the United States increased about 3% above what would have been expected from a comparable “influx” of native-born workers. Depending on which method of estimation one selects, this immigration-prompted increase explains from 16% to 52% of the decade's total increase in nonfarm self-employment, a surprising reversal of nearly 10 decades of uninterrupted decrease. Rate of self-employment among immigrants had no effect upon the rate of or returns to self-employment of native-born workers in general or native blacks in particular.