How Immigration May Affect U.S. Native Entrepreneurship: Theoretical Building Blocks and Preliminary Results

Harriet Duleep (), David Jaeger and Mark Regets ()
Additional contact information
Harriet Duleep: College of William and Mary

No 6677, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper describes the theoretical underpinnings and provides empirical evidence for a model that predicts a positive impact of immigration on entrepreneurial activity. Immigrants, we hypothesize, facilitate innovation and entrepreneurship by being willing and able to invest in new skills. At the heart of this theoretical prediction is the observation that human capital not immediately valued in the U.S. labor market is useful for learning new skills. Because immigrants face a lower opportunity cost of investing in new skills or methods, this "transfer" of source-specific skills to the U.S. may lead immigrants to be more flexible in their human capital investments than observationally equivalent natives. Areas with large numbers of immigrants (even if they are not self-employed) may prove to be areas in which entrepreneurship and innovation are easier to accomplish. Our theory offers a unique perspective on the contributions of immigrants to economic development beyond traditional perspectives that focus on low-cost immigrant labor or immigrant entrepreneurship.

Keywords: immigration; innovation; entrepreneurship; human capital investment; skill transferability; opportunity cost; learning transferability (search for similar items in EconPapers)
JEL-codes: J15 J24 J39 J61 L26 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2012-06
New Economics Papers: this item is included in nep-cse, nep-ent, nep-ino, nep-mig and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: How Immigration May Affect U.S. Native Entrepreneurship: Theoretical Building Blocks and Preliminary Results (2013)
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