Does the level of economic development and the market size of immigrants' country of birth matter for their engagement in entrepreneurial activities in the USA? Evidence from the Princeton's New Immigrant Surveys of 2003 and 2007

Abstract

In order to examine the impacts of economic status and market size of immigrants’ country of birth on their propensity to become entrepreneurs in the USA, we estimate a gravity model that involves immigrants’ decisions to pursue entrepreneurship in the USA by employing data from the Princeton's New Immigrant Surveys of 2003 and 2007. Our results show that immigrants coming from economically advanced countries are more likely to be engaged in entrepreneurial activities in the USA, not only at the beginning stage of their arrival, but also after spending some time (4 years) in the USA However, we find that the market size of immigrants’ country of origin, as measured by population size does not have any significant effect on their decision to be self-employed in the USA. In addition, we report a positive relationship between immigrants’ commitment to work and their likelihood of pursuing entrepreneurship in the USA. Furthermore, we find a U-shaped relationship between immigrants’ working experience as self-employed, or/and wage worker in the USA and their likelihood to open their own business in the USA over time.