Community Determinants of Immigrant Self-Employment: Human Capital Spillovers and Ethnic Enclaves

Liliana Sousa, Cornell University

This paper considers the impact of community human capital externalities on the self-employment propensity of immigrants. I find evidence of human capital spillover effects differentially affecting high and low human capital immigrants. Immigrants with low educational attainment are more likely to be self-employed if they reside in an ethnic community boasting higher human capital. On the other hand, immigrants with a college education do not show any changes in self-employment propensity based on the educational attainment of their co-ethnics. I find that, among immigrants from Spanish-speaking countries, immigrants are more likely to be self-employed when local co-ethics also speak English; this effect is more pronounced for immigrants who do not speak English. My results show that many immigrants are more likely to enter into self-employment because of their communities. These spillover effects may represent an alternative for immigrants who face high costs to learning English and/or acquiring more education.