Association for Public Policy Analysis & Management

A broad body of research shows that entrepreneurs and small/young businesses are key engines in job creation, innovation and economic growth. Not surprisingly, promoting entrepreneurship is viewed as a national and local priority by governments around the world. A frequently held view, often supported by research, is that immigrants are especially entrepreneurial, a sentiment commonly shared by policymakers and reflected in immigration policies. Many developed countries have created special visas and entry requirements in an attempt to attract immigrant entrepreneurs (Fairlie and Lofstrom, 2015). In this paper I analyze recent U.S. data to examine how immigrants in the last 15 years have contributed to entrepreneurship through self-employment numbers and earnings. More specifically, I aim to address the question: How do immigrants contribute to recent U.S. self-employment trends?

Using 2000 U.S. Census and 2005-2014 American Community Survey (ACS) I find that immigrants increasingly contribute to entrepreneurship in the U.S. and that the contributions may be especially significant during economic downturns. The data show that while the share of immigrants in the U.S. labor force has grown from about 12.5 percent in 2000 to 16.7 percent in 2014, immigrants’ share of the self-employed over the same period grew from 12.5 percent to 21 percent. Furthermore, I find that immigrants account for more than 90% of the growth in self-employment since 2000, with a particularly significant contribution since the Great Recession. Between 2000 and 2007, U.S. born self-employment grew by about 1,390,000, a growth of almost 14 percent. Immigrant self-employment increased over the same period by almost 1 million, or almost 70 percent. In this booming period immigrants accounted for about 42 percent of the self-employment growth in the U.S. While there was a loss of almost 1.3 million U.S. born self-employed since 2007, immigrants added about 272,000. There were increases across all education groups but growth in low-skilled immigrant self-employment especially notable. The paper will further break down the analysis of trends by industry and examine earnings.