Businesses create more jobs in countries with higher share of immigrants because of skill complementarity

Abstract

PurposePast and recent immigration flows have made societies increasingly more diverse, with important implications for the economy. This article investigates the empirical relationship between ethnic, and birthplace immigration diversity on job creation and entrepreneurship.Design/methodology/approachWe use multilevel modelling and the Global Entrepreneurship Monitor adult population survey across 60 countries from 2001 to 2018.FindingsAs earlier literature, we find that people have a higher probability of becoming entrepreneurs in more ethnically diverse countries. Nonetheless, businesses located in more ethnically diverse countries hire fewer employees. Businesses, on the other hand, create more jobs in countries with a higher proportion of skilled and unskilled immigrants due to skill complementarity.Research originalityContrary to commonly held views, our findings suggest that ethnic and immigration diversity have opposing effects on entrepreneurship and provide important insights into the debate over the economic impact of immigration.