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Tightened Immigration Policies and the Self‐Employment Dynamics of Mexican Immigrants

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  • Chunbei Wang

Abstract

As the U.S. government has intensified its crackdown on illegal immigration in recent years, an important question to ask is how undocumented immigrants react to the stricter enforcement of immigration laws. This paper seeks to answer whether they increasingly choose self‐employment in an effort to avoid apprehension and subsequent deportation. To guard against endogeneity bias that might stem from increased enforcement in reaction to illegal immigration, the empirical analysis makes use of the September 11 terror attacks (9/11), which inadvertently triggered stricter immigration enforcement nationwide, as a natural experiment. Using a difference‐in‐differences approach and data from the Current Population Survey between 1996 and 2006, this paper examines the changes in the self‐employment choices of male and non‐citizen Mexican immigrants (a proxy for undocumented immigrants) compared to less‐educated Whites (the control group). The findings indicate that male and non‐citizen Mexican immigrants are substantially more likely (40 percent) to enter into self‐employment than less‐educated Whites after 9/11. The analysis further suggests that this finding is not driven by the 2001 recession that coincided with the terror attacks. The increased entries are mainly observed in the group that is most likely to be in the United States illegally and in those who face strong economic incentives. In addition, increased entries are not driven by increased unemployment among Mexican immigrants after the 9/11 event, but, rather, they reflect a change in the behavior of the unemployed Mexican immigrants, perhaps due to changes in perceived risks of detection and deportation.

Suggested Citation

  • Chunbei Wang, 2019. "Tightened Immigration Policies and the Self‐Employment Dynamics of Mexican Immigrants," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(4), pages 944-977, September.
  • Handle: RePEc:wly:jpamgt:v:38:y:2019:i:4:p:944-977
    DOI: 10.1002/pam.22160
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    Cited by:

    1. Andrew J. Padovani & Cynthia Bansak, 2020. "EEA Immigration Symposium Introduction," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 46(1), pages 1-4, January.
    2. Chunbei Wang & Magnus Lofstrom, 2020. "September 11 and the Rise of Necessity Self-Employment Among Mexican Immigrants," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 46(1), pages 5-33, January.
    3. Fairlie, Robert, 2020. "The Impact of COVID-19 on Small Business Owners: The First Three Months after Social-Distancing Restrictions," MPRA Paper 113127, University Library of Munich, Germany.
    4. Catalina Amuedo-Dorantes & Magnus Lofstrom & Chunbei Wang, 2022. "Immigration Policy and the Rise of Self-Employment among Mexican Immigrants," ILR Review, Cornell University, ILR School, vol. 75(5), pages 1189-1214, October.
    5. Robert Fairlie, 2020. "The impact of COVID‐19 on small business owners: Evidence from the first three months after widespread social‐distancing restrictions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(4), pages 727-740, October.
    6. Grashuis, Jasper, 2021. "Self-employment duration during the COVID-19 pandemic: A competing risk analysis," Journal of Business Venturing Insights, Elsevier, vol. 15(C).
    7. Amuedo-Dorantes, Catalina & Arenas-Arroyo, Esther & Wang, Chunbei, 2020. "Is immigration enforcement shaping immigrant marriage patterns?," Journal of Public Economics, Elsevier, vol. 190(C).

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