Immigration, Spatial Mismatch and Entrepreneurship in Empowerment Zones and Enterprise Communities

Abstract

Did immigrants contribute to revitalization in the Department of Housing and Urban Development’s (HUD) Empowerment Zone/Enterprise Community (EZ/EC) programs? These programs combined strategic planning grants for capacity building and economic opportunity with tax incentives for businesses who do work in high-poverty census tracts. Theories of immigrant entrepreneurship would argue that immigrants start businesses when they are excluded from formal labor markets or because they have a concentration of coethnic resources as potential customers, investors and employees. This study estimates changes in immigrant population, the spatial mismatch index (aka jobs housing balance), and entrepreneurship. The population of immigrants increased in designated EZ/ECs from 1990 to 2000. Furthermore, for every one percent change in the percentage foreign born, there was a 20% increase in the rate of immigrant entrepreneurs as a proportion of the labor force, holding other variables constant. However, the rate of native-born entrepreneurs in EZ/ECs also increased at about the same rate, suggesting that nativity, in and of itself, did not influence returns to entrepreneurship. In regards to the impact of the EZ/EC on the jobs housing balance for immigrants, there was a 6 to 15% improvement for immigrants, holding other variables constant. Taking population and job trends together suggests that the EZ/EC program improved the job housing balance through entrepreneurship. Future urban policy needs to acknowledge the role of immigration in local economies through culturally competent workforce development, language training, and mentoring new entrepreneurs.