Entrepreneurship and immigrant wages in US labor markets: A multi-level approach

Some immigrants to the United States arrive to find co-ethnic communities that are highly entrepreneurial, and many members of their own group among their prospective employers. Other immigrants settle in far less entrepreneurial communities and have few if any co-ethnics among prospective employers. We assess whether co-ethnic entrepreneurship improves immigrant employees’ wages. Previous research has focused on a small number of the largest ethnic groups in the largest cities. We study immigrants in 490 ethnic communities across the United States. Controlling for ethnicity, metropolitan area, and key individual- and community-level characteristics, we find effects of co-ethnic entrepreneurship on immigrant employees’ wages that vary substantially with the characteristics of entrepreneurs and employees. Overall, immigrant employees earn lower hourly wages in more entrepreneurial communities, but they earn higher wages where co-ethnic entrepreneurs are both numerous and economically successful. Low-skilled immigrant employees earn significantly less in highly entrepreneurial communities than they otherwise would.