Why are some foreign-born workers more entrepreneurial than others?

Abstract

Foreign-born workers have made significant and substantial contributions to economic productivity and new firm creation in the United States. This paper identifies predictors of entrepreneurial participation among foreign-born workers, combining nationally representative survey datasets covering the U.S. resident, college-educated workforce with country-of-origin macro statistics from the Global Entrepreneurship Monitor. Immigrants who come to the U.S. after earning university degrees abroad are more likely to own businesses than other college-educated, U.S. resident workers. However, much of their higher rate of business ownership can be attributed to differences in demographic characteristics, such as years of postgraduate work experience and marital status. By contrast, science and engineering-based business ownership is most common among immigrants who came to the U.S. to pursue higher education. Furthermore, after controlling for differences in human capital, U.S.-trained adult immigrants have higher propensity to own businesses than other foreign-born workers and native U.S. citizens, overall. U.S.-trained immigrants’ higher probability of business ownership is not explained by differences in human capital or other demographic characteristics, but does seem partly attributable to differences across foreign-born workers’ countries-of-origin. Specifically, adult immigrants and foreign temporary residents from countries that offer entrepreneurs lower levels of cultural support are more likely to start and own U.S. businesses.