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Social Networks, Ethnicity, and Entrepreneurship

William Kerr () and Martin Mandorff

No 6211, CESifo Working Paper Series from CESifo Group Munich

Abstract: We study the relationship between ethnicity, occupational choice, and entrepreneurship. Immigrant groups in the United States cluster in specific business sectors. For example, the concentration of Korean self-employment in dry cleaners is 34 times greater than other immigrant groups, and Gujarati-speaking Indians are similarly 108 times more concentrated in managing motels. We develop a model of social interactions where non-work relationships facilitate the acquisition of sector-specific skills. The resulting scale economies generate occupational stratification along ethnic lines, consistent with the reoccurring phenomenon of small, socially-isolated groups achieving considerable economic success via concentrated entrepreneurship. Empirical evidence from the United States supports our model’s underlying mechanisms.

Keywords: entrepreneurship; self-employed; occupation; ethnicity; immigration; networks (search for similar items in EconPapers)
JEL-codes: L26 D21 D22 D85 F22 J15 L14 M13 (search for similar items in EconPapers)
Date: 2016
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Working Paper: Social Networks, Ethnicity, and Entrepreneurship (2015) Downloads
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