Recent research by the Massachusetts Institute of Technology (MIT) shows immigrants in the US are more likely to start businesses than native-born Americans. The study takes a wide-ranging look at registered businesses across the country.
Co-authored by an MIT economist, the study finds that, per capita, immigrants are about 80 percent more likely to find a firm than US-born citizens. Those firms also have about 1 percent more employees than those founded by US natives, on average. “Immigrants, relative to natives and relative to their share of the population, found more firms of every size,” says Pierre Azoulay, an economist at the MIT Sloan School of Management and co-author of a published paper detailing the study's results. He's the International Programs Professor of Management at the MIT Sloan School of Management and a Research Associate at the National Bureau of Economic Research.
Taking firm creation into account, the results indicate that immigration to the US is associated with a net gain in job availability, contrary to the common perception that immigrants fill jobs that US-born workers would otherwise have.
What does the study show?
The study showed that 0.83 percent of immigrants in the US founded a firm from 2005 to 2010, while 0.46 percent of native-born US citizens founded a firm during the same period. That disparity — the 80 percent higher rate of firm founding — also held up among firms founded before 2005.
Professor Azoulay emphasizes that the study, which focused on the empirical facts about business creation, does not explain why immigrants tend to found firms more often. It may be that some immigrants, finding it hard to access the US workforce as employees, may start service-type businesses instead. Alternately, some immigrants to the US arrive as students, stay in the country, and found high-growth, high-tech startup firms.
Research process and economy benefits: “Immigrants aren't job takers”
The researchers used US Census Bureau data and tax records for all new firms founded in the US from 2005 through 2010, a total of 1.02 million businesses. This allowed them to study firm creation and job growth in those companies over a five-year period. To analyze firms created before that and their founders, the research team examined the US Census Bureau's Survey of Business Owners from 2012, a periodic survey with data covering 200,000 businesses and including data about the owners. This allowed the scholars to expand the study's time period and include many larger firms. The team also analyzed the 2017 Fortune 500, identifying the citizenship and immigration status of founders of 449 of those companies.
“Immigrants found more firms in every bucket,” Azoulay says. “They create more firms; they create more small firms, they create more medium-size firms, they create more large firms.” He adds: “It's not the case that immigrants only create growth-oriented startups. It's not that they just create subsistence businesses. They create all kinds of businesses, and they create a lot of them.”
The findings suggest that immigrants act more as ‘job creators' than ‘job takers' and that non-US-born founders play outsized roles in US high-growth entrepreneurship.
You will perhaps recall that former President Donald Trump had a singular focus on restricting immigration, and his administration has issued more than 400 executive actions that have reshaped the US immigration system. Considering professor Azoulay's research findings, that governmental step relates more to a biased policy based on xenophobia than an economic action.
Why is there a steady resistance to immigration in US?
For Azoulay “any discussion on immigration needs to start on a common set of facts”. The MIT research demystifies common conservative ideas that “immigrants are taking the political rights and jobs of native Americans” as repeatedly shared by the journalist Tucker Carlson on Fox NEWS in the United States. These thoughts, categorized as white supremacy and white replacement theory, have been used to threaten immigrants and even killing them, as happened on May 18 this year. An 18-year-old man who allegedly shot and killed 10 people Saturday afternoon in Buffalo, New York, was motivated by racism, authorities said, targeting a supermarket in the heart of a predominantly Black community. Eleven of the 13 people shot by the White suspect at the Tops Friendly Market were Black, officials said.
The “Great Replacement” is a conspiracy theory that falsely alleges white people are being “replaced” in America for non-white people through immigration, interracial marriage, and eventually violence.
The Indivisible Guide, a group of former congressional staffers that reveal best practices for making Congress listen, published on social media their positioning on the issue. “It shouldn't be dangerous to buy groceries, see a movie, attend school, or visit a place of worship. Thoughts and prayers from Republicans are hollow until they get serious about addressing the toxic combination of guns and white supremacist extremism in this country.”
