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Mexican-American Entrepreneurship

Author

Listed:
  • Fairlie, Robert W.

    (University of California, Los Angeles)

  • Woodruff, Christopher

    (University of Oxford)

Abstract
Although business ownership has implications for income inequality, wealth accumulation and job creation, surprisingly little research explores why Mexican-Americans are less likely to start businesses and why the businesses that they start are less successful on average than non-Latino whites. We conduct a comprehensive analysis of Mexican-American entrepreneurship using microdata from the 2000 U.S. Census, the matched and unmatched March and Outgoing Rotation Group Files of the Current Population Survey from 1994 to 2004, and the Legalized Population Survey (LPS). We find that low levels of education and wealth explain the entire gap between Mexican immigrants and non-Latino whites in business formation rates. Nearly the entire gap in business income for Mexican immigrants is explained by low levels of education and limited English language ability. Using the natural experiment created by the Immigration Reform and Control Act (IRCA), we find that legal status represents an additional barrier for Mexican immigrants. A conservative estimate suggests that the lack of legal status reduces business ownership rates by roughly seven-tenths of a percentage point for both men and women. Human and financial capital deficiencies are found to limit business ownership and business success among second and third-generation Mexican-Americans, but to a lesser extent. These findings have implications for the debates over the selection of immigrants and the assimilation of Mexican-Americans in the U.S. economy.

Suggested Citation

  • Fairlie, Robert W. & Woodruff, Christopher, 2008. "Mexican-American Entrepreneurship," IZA Discussion Papers 3488, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3488
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    References listed on IDEAS

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    Cited by:

    1. Vincenzo Butticè & Diego Useche, 2022. "Crowdfunding to overcome the immigrant entrepreneurs’ liability of outsidership: the role of internal social capital," Small Business Economics, Springer, vol. 59(4), pages 1519-1540, December.
    2. Fairlie, Robert W. & Lofstrom, Magnus, 2013. "Immigration and Entrepreneurship," IZA Discussion Papers 7669, Institute of Labor Economics (IZA).
    3. Robert W. Fairlie, 2013. "Entrepreneurship, Economic Conditions, and the Great Recession," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(2), pages 207-231, June.
    4. Maude Toussaint-Comeau, 2005. "Do enclaves matter in immigrants’ self-employment decision?," Working Paper Series WP-05-23, Federal Reserve Bank of Chicago.
    5. Richard Fabling, 2018. "Entrepreneurial beginnings: Transitions to self-employment and the creation of jobs," Working Papers 18_12, Motu Economic and Public Policy Research.
    6. Peterson, Robert A. & Crittenden, Victoria L., 2020. "Exploring customer orientation as a marketing strategy of Mexican-American entrepreneurs," Journal of Business Research, Elsevier, vol. 113(C), pages 139-148.
    7. Pia M. Orrenius & Madeline Zavodny & Emily Gutierrez, 2018. "Do State Employment Eligibility Verification Laws Affect Job Turnover?," Contemporary Economic Policy, Western Economic Association International, vol. 36(2), pages 394-409, April.
    8. Katare, Bhagyashree & Ren, Lifeng & Marshall, Maria I., 2017. "Immigrant Farm and Agricultural Entrepreneurship," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258103, Agricultural and Applied Economics Association.
    9. Robert Fairlie, 2024. "The impacts of COVID‐19 on racial inequality in business earnings," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 43(1), pages 258-288, January.
    10. Cathy Yang Liu, 2012. "Intrametropolitan Opportunity Structure and the Self-Employment of Asian and Latino Immigrants," Economic Development Quarterly, , vol. 26(2), pages 178-192, May.
    11. Catia Batista & Tara McIndoe-Calder & Pedro C. Vicente, 2017. "Return Migration, Self-selection and Entrepreneurship," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(5), pages 797-821, October.
    12. Sari Pekkala Kerr & William R. Kerr & Tina Xu, 2017. "Personality Traits of Entrepreneurs: A Review of Recent Literature," NBER Working Papers 24097, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Mexican-Americans; entrepreneurship; inequality;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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