More likely to become self-employed? Exploring the role of immigrant entrepreneurship

Migrants on the Mexican side of the border wait to cross into the United States at a point near El Paso, Texas, on March 19, 2024 – Copyright AFP HERIKA MARTINEZ

Immigration and entrepreneurship are two issues of frequent political and policy discussion in the U.S. This is an area that Chunbei Wang, associate professor in the College of Agriculture and Life Sciences’ Department of Agricultural and Applied Economics, has conducted extensive research. The findings shed light on the intersection of these topics.

Immigration has grown significantly worldwide, reaching 281 million international migrants in 2020, according to the United Nations Department of Economic and Social Affairs. With this increase, the motivation for immigrant self-employment varies, with some choosing it as an alternative labour market choice to unemployment and possible discrimination in the wage sector.

Whereas other immigrants focus more on profit opportunity or seek a degree of independence and to become their own boss.

What strikes Wang as being of great interest is the fact that, in the U.S,, immigrants are nearly twice as likely as natural-born citizens to become entrepreneurs, representing almost 30 percent of all new entrepreneurs. Why is this the case?

“The factors that influence their entrepreneurship decisions are complex,” Wang explains.

Wang goes on to discuss the microeconomic factors such as education, language skills, and financial capital can facilitate business startups, while social factors such as customer or bank discrimination can deter self-employment. Wang outlines these factors in her book chapter titled “Immigrant Entrepreneurs”.

Macroeconomic influences such as business cycles or immigration policies can also play a role.

“Immigrants are known to have high business ownership rates in several major immigrant-receiving countries,” Wang continues. “Their contributions to the economy have been highlighted in studies and used as a justification for pushing changes in immigration policies, so it is important to learn what factors determine their entrepreneurship decisions.”

Using nationally representative data sets, Wang, together with another researcher, Magnus Lofstrom (policy director and senior fellow at the Public Policy Institute of California) has provided information for policymakers seeking to understand the relationship between immigration and entrepreneurship.

Wang has also conducted research in understanding the surge in Hispanic immigrant business ownership in recent decades. There is a notable trend pushing Mexican immigrants into self-employment as an alternative livelihood. This area of research has been published by Wang in the ILR Review, in an article titled “Immigration policy and the rise of self-employment among Mexican immigrants.”