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Skilled and Unskilled Immigrants and Entrepreneurship in a Developed Country

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  • Hamid Beladi
  • Saibal Kar

Abstract

Evidence from some OECD countries suggests that skilled immigrants are over-represented in entrepreneurship. We offer an analytical explanation to show that it may be a direct outcome of asymmetric information between immigrants and potential employers in the rich countries. Limiting occupational choices to self-employment and employment, we show that skilled immigrants vis-à-vis natives may be proportionally over-represented in small businesses. This compensates for the income loss in the labor market. It results from higher critical risk aversion among skilled immigrants compared with natives and subsequently leads to higher average income for all immigrants in the cross-section. Finally, we show why a lesser number of unskilled immigrants enter self-employment and discuss the speed of income convergence between all immigrants and natives.

Suggested Citation

  • Hamid Beladi & Saibal Kar, 2015. "Skilled and Unskilled Immigrants and Entrepreneurship in a Developed Country," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 666-682, August.
    • Handle: RePEc:bla:rdevec:v:19:y:2015:i:3:p:666-682
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    Cited by:

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    2. Dileni Gunewardena & Abdoulaye Seck, 2020. "Heterogeneity in entrepreneurship in developing countries: Risk, credit, and migration and the entrepreneurial propensity of youth and women," Review of Development Economics, Wiley Blackwell, vol. 24(3), pages 713-725, August.
    3. Martin Mabunda Baluku & Edward Bantu & Kathleen Otto, 2018. "Effect of Locus of Control on Entrepreneurial Attitudes and Self-Employment Intentions: The Moderating Role of Individualism," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 26(03), pages 251-283, September.
    4. Dutta, Nabamita & Kar, Saibal & Ray, Shaswata, 2022. "Human Capital and Self-Employment in India: An Empirical Analysis for Different Cohorts," IZA Discussion Papers 15825, Institute of Labor Economics (IZA).
    5. Paola Coletti & Nicola Pasini, 2023. "Relaunching labour-market integration for migrants: What can we learn from successful local experiences?," Journal of International Migration and Integration, Springer, vol. 24(1), pages 67-90, March.
    6. Valencia, Oscar & Angarita, Matilde & Santaella, Juan & De Castro, Marcela, 2020. "Do Immigrants Bring Fiscal Dividends?: The Case of Venezuelan Immigration in Colombia," IDB Publications (Working Papers) 10958, Inter-American Development Bank.
    7. Bei Luo & Terence Tai-Leung Chong, 2019. "Regional differences in self-employment in China," Small Business Economics, Springer, vol. 53(3), pages 813-837, October.
    8. Nabamita Dutta & Saibal Kar & Russell S. Sobel, 2021. "What influences entrepreneurship among skilled immigrants in the USA? Evidence from micro-data," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(3), pages 146-154, July.

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