Working Paper: NBER ID: w7561
Authors: Robert W. Fairlie; Bruce D. Meyer
Abstract: A rapidly growing literature examines the impact of immigrants on the labor market outcomes of native-born Americans. However, the impact of immigration on natives in self-employment has not been examined, despite the over-representation of immigrants in that sector. We first present a new general equilibrium model of self-employment and wage/salary work. For a range of plausible parameter values, the model predicts small negative effects of immigration on native self-employment rates and earnings. Using 1980 and 1990 Census microdata, we then examine the relationship between changes in immigration and native self-employment rates and earnings across 132 of the largest metropolitan areas in the United States. We find evidence supporting the hypothesis that self-employed immigrants displace self-employed natives. The effects are much larger than those predicted by simulations of the theoretical model. Immigrants, however, do not have a negative effect on native self-employment earnings. Our findings are similar if we weight immigration rates by the propensity of immigrant groups to be self-employed or if we try alternative estimation techniques and specifications.
Keywords: No keywords provided
JEL Codes: J23; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Immigration (F22) | Native Self-Employment Rates (J15) |
| Immigrant Self-Employment (J68) | Native Self-Employment Rates (J15) |
| Immigration (F22) | Native Self-Employment Earnings (J39) |
| Model Predictions (C59) | Native Self-Employment Rates (J15) |