Immigrants to the US have long been known for their entrepreneurial spirit and drive to succeed. According to a recent study titled “Immigrant Entrepreneurship: New Estimates and a Research Agenda,” immigrants are not only more entrepreneurial than the native population but are also overrepresented among high-growth startups and venture-backed tech firms. The study, conducted by Saheel Chodavadia, Sari Pekkala Kerr, William Kerr, and Louis Maiden, sheds light on the prevalence and predictors of immigrant entrepreneurship using business surveys and administrative employment records.
One of the challenges in measuring the prevalence of immigrant entrepreneurship is the lack of reliable data that distinguishes natives from immigrants or accurately detects entrepreneurial business creation. However, self-employment is often used as a proxy for entrepreneurship. The study found that immigrants constitute 21.5 percent of self-employed workers and 24.2 percent of new business owners, indicating a significant presence in the entrepreneurial landscape.
In 2019, immigrants accounted for about 24 percent of entrepreneurs, up from 19 percent in 2007. The researchers also analyzed data from the Longitudinal Employer-Household Dynamics (LEHD) database, which showed that the immigrant share of entrepreneurship rose from 22.5 percent in 2003 to 28.9 percent in 2020. These findings consistently show that immigrants make up a significant portion of entrepreneurs, surpassing their representation in the general population.
Moreover, immigrant-owned firms are found to be more innovative, generating more patents per worker and bringing new technologies to market at a higher rate than native-owned firms. While differences in education levels and field-of-study choices between immigrants and natives may explain some of these disparities, they do not fully account for the higher innovation rates of immigrant-led startups.
Immigration policies play a crucial role in shaping immigrant entrepreneurship. Restrictive visa policies often prevent aspiring entrepreneurs from founding a firm after graduating from a US university. The study suggests that programs such as points-based visa systems, visa systems that favor self-employed workers or entrepreneurs, and efforts to attract foreign entrepreneurs can have a positive impact on immigrant entrepreneurship.
Overall, the research highlights the significant contributions of immigrants to the entrepreneurial landscape in the US. Their drive, innovation, and willingness to take risks have propelled many high-growth startups and tech firms to success. By understanding and supporting immigrant entrepreneurs, policymakers and business leaders can harness the full potential of this dynamic and diverse group in driving economic growth and innovation.
