Labor Market Assimilation and the Self-Employment Decision of Immigrant Entrepreneurs

Magnus Lofstrom

No 54, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper uses data from the 1980 and 1990 U.S. Censuses to study labor market assimilation of self-employed immigrants. Separate earnings functions for the self-employed and wage/salary workers are estimated. To control for endogenous sorting into the sectors, models of the self-employment decision are estimated. Variables for the proportion of immigrants in the population and average earnings ratios are used as instruments to control for self-selection into self-employment and consequently identify the inverse Mills correction term in the earnings models. Self-employed immigrants do substantially better in the labor market than wage/salary immigrants. Earnings of self-employed immigrants are predicted to converge with natives’ wage/salary earnings at about age 30 and natives’ self-employed earnings at about age 40. Including the self-employed in the sample reduces the immigrant-native earnings gap by, on average, roughly 14 percent.

Keywords: self-employment; assimilation; Immigration (search for similar items in EconPapers)
JEL-codes: J15 J23 J61 (search for similar items in EconPapers)
Pages: 56 pages
Date: 1999-08
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Citations: View citations in EconPapers (12)

Published - published in: Journal of Population Economics, 2002, 15 (1), 83-114

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Journal Article: Labor market assimilation and the self-employment decision of immigrant entrepreneurs (2002)
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