Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/62439 
Year of Publication: 
2012
Series/Report no.: 
IZA Discussion Papers No. 6677
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper describes the theoretical underpinnings and provides empirical evidence for a model that predicts a positive impact of immigration on entrepreneurial activity. Immigrants, we hypothesize, facilitate innovation and entrepreneurship by being willing and able to invest in new skills. At the heart of this theoretical prediction is the observation that human capital not immediately valued in the U.S. labor market is useful for learning new skills. Because immigrants face a lower opportunity cost of investing in new skills or methods, this transfer of source-specific skills to the U.S. may lead immigrants to be more flexible in their human capital investments than observationally equivalent natives. Areas with large numbers of immigrants (even if they are not self-employed) may prove to be areas in which entrepreneurship and innovation are easier to accomplish. Our theory offers a unique perspective on the contributions of immigrants to economic development beyond traditional perspectives that focus on low-cost immigrant labor or immigrant entrepreneurship.
Subjects: 
immigration
innovation
entrepreneurship
human capital investment
skill transferability
opportunity cost
learning transferability
JEL: 
J15
J24
J39
J61
L26
Document Type: 
Working Paper

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