Working Paper: CEPR ID: DP15920
Authors: Harriet Orcutt Duleep; David A. Jaeger; Peter McHenry
Abstract: We present a novel theory that immigrants facilitate innovation and entrepreneurship by being willing and able to invest in new skills. Immigrants whose human capital is not immediately transferable to the host country face lower opportunity costs of investing in new skills or methods and will be more flexible in their human capital investments than observationally equivalent natives. Areas with large numbers of immigrants may therefore lead to more entrepreneurship and innovation, even among natives. We provide empirical evidence from the United States that is consistent with the theory’s predictions.
Keywords: immigration; innovation; entrepreneurship; human capital
JEL Codes: J15; J24; J39; J61; L26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher share of immigrants in a state (K37) | increased entrepreneurship among natives (L26) |
| high-skilled immigrant shares (J61) | increased entrepreneurship rates (L26) |
| lower-skilled immigrant shares (J69) | no similar effect on entrepreneurship rates (L26) |
| entrepreneurship (M13) | immigration patterns (F22) |