 |
View
Issue as a PDF
In Memoriam:
Irving B. Harris, 1910-2004
A Word from the Dean: State of the
School - My Vision for the Future of the Harris School
Trickle
Down Effects: Parents’ Unemployment and Their
Children’s School Performance
Immigrant
Entrepreneurship: Does Fulfilling an American Dream
Cause Economic Displacement?
Foundation
Support Helps Develop New Urban Leaders
Making a Difference: Diane Gibson,
AM‘96, PhD’99
Making
a Difference: Irene Basloe Saraf, AM’95
Community Notes
The
Levin Faculty Fellowship: Funding Urban Research
Cash & Carry:
Banking and the Poor
Policy
in Practice: Students Reflect on Group Internships
At Home and Abroad
The
2004 Entering Class
Keep
in touch!
|
|
For
centuries, immigrants have arrived at America’s
doors with big dreams and little else.
According to the US Census, the number
of immigrants more than doubled between 1980 and 2000,
a trend that sparked McCormick Tribune Professor Bruce
D. Meyer’s
interest and led him to question the effects of such
a significant influx. “If you look at numbers of
immigrants in the 1980s, you have to go back to 1901–10
to find as many immigrants,” says Meyer. “The
1990s are even higher.”
Because America has historically been a beacon for self-starters
and small businesses, the trend in immigration prompted
Meyer to research the effects of the influx on surrounding
labor markets. Today, immigrant self-employment has become
a bone of contention in many inner-city neighborhoods,
despite economic theory that suggests that immigration
should have little effect on the start-up rates of native-owned
businesses.
"Immigrants don't have that much greater a tendency
to start businesses than natives, not enough to overwhelm
the fact that they're also consumers. They buy a lot
of things from all businesses," says Meyer, who
along with University of California-Santa Cruz economist
Richard Fairlie, examines self-employment among immigrants
in a recent Journal of Labor Economics article.1
Yet, despite theory, Meyer and Fairlie
find that in the 1980s and 1990s immigrant self employment
did indeed displace that of natives. “Our analyses seem to
show that in metro areas where there are more immigrants,
particularly from groups that are likely to be self-employed,
the influx does have a substantial effect on self-employment
of natives,” Meyer says. Using 1980 and 1990 census
data from 132 of the country’s largest metropolitan
areas, they find that for approximately every two immigrant-owned
businesses, one native-owned business was crowded out.
“The results present an interesting puzzle, which
runs counter to theory,” Meyer says, “and
which we weren’t able to resolve.” Even more
puzzling, they did not find the expected decline in native
earnings among the self-employed. “That’s
what we thought would drive the decline in the number
of native-owned business; their earnings fall and that’s
why they move to other areas or take jobs in the wage/salary
sector.”
Instead, the authors speculate that self-employed immigrants
may be primarily displacing natives who own marginal
businesses or who own businesses with less profit potential.
For example, ethnic restaurants might crowd out less
expensive native-owned restaurants but not the more expensive
native-owned restaurants. These findings, the authors
argue, should be put in context: the 1980s and 1990s
were also decades of strong growth among native-born
entrepreneurs. Thus, it appears that self-employed immigrants
may have primarily taken away opportunities for natives
to start new businesses rather than putting existing
owners out of business. Perhaps, in fact, the American
dream does indeed have room for everyone.
Barbara Ray
1Bruce D. Meyer and Robert
W. Fairlie, “The Effect
of Immigration on Native Self-Employment,” Journal
of Labor Economics, 21, July 2003, 619–650.
|
