Immigrants are not taking away jobs from Americans but creating their own firms and jobs and expanding labor supply.
That’s according to a new study co-authored by a MIT economist, titled “Immigration and Entrepreneurship in the United States.”
The paper appears in the spring issue of American Economic Review: Insights and is written by Pierre Azoulay, an economist at the MIT Sloan School of Management as well as Benjamin Jones, the Gordon and Llura Gund professor of entrepreneurship and a professor of strategy at Northwestern University’s Kellogg School of Management; J. Daniel Kim PhD ’20, an assistant professor of management at the University of Pennsylvania’s Wharton School; and Javier Miranda, a principal economist at the U.S. Census Bureau.
It found that immigrants are 80% more likely to start a business than people born in the U.S. The new research found that per capita, foreign-born residents started more businesses of all sizes. The study’s results are in keeping with findings in previous research.
“Immigrants, relative to natives and relative to their share of the population, found more firms of every size,” says Azoulay.
Taking firm creation into account, the results indicate that immigration to the U.S. is associated with a net gain in job availability, contrary to the common perception that immigrants fill jobs that U.S.-born workers would otherwise have.
The authors examined three types of data sources using U.S. Census Bureau data and tax records for all new firms founded in the U.S. from 2005 through 2010, a total of 1.02 million businesses. This allowed them to study firm creation and job growth in those companies over a five-year period.
The research team examined the U.S. Census Bureau’s Survey of Business Owners from 2012, a periodic survey with data covering 200,000 businesses and including data about the owners. This allowed the scholars to expand the study’s time period and include many larger firms.
However, many of the largest companies in the U.S. do not respond to the Survey of Business Owners. For this reason, the research team also analyzed the 2017 Fortune 500, identifying the citizenship and immigration status of founders of 449 of those companies.
Ultimately, the study showed that 0.83% of immigrants to the U.S. founded a firm from 2005 to 2010, while 0.46% of native-born U.S. citizens founded a firm in that time. That disparity—the 80% higher rate of firm founding—also held up among firms founded before 2005.
“Immigrants found more firms in every bucket,” Azoulay says. “They create more firms, they create more small firms, they create more medium-size firms, they create more large firms.” He adds: “It’s not the case that [immigrants] only create growth-oriented startups. It’s not the case they just create subsistence businesses. They create all kinds of businesses, and they create a lot of them.”
Azoulay emphasizes that the study, focused on the empirical facts about business creation and does not explain why immigrants tend to found firms more often.
The writer is publisher of NewsAmericasNow.com – The Black Immigrant Daily News