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Are Immigrants More Innovative? Evidence from Entrepreneurs

November 2023

Working Paper Number:

CES-23-56

Abstract

We evaluate the contributions of immigrant entrepreneurs to innovation in the U.S. using linked survey-administrative data on 199,000 firms with a rich set of innovation measures and other firm and owner characteristics. We find that not only are immigrants more likely than natives to own businesses, but on average their firms display more innovation activities and outcomes. Immigrant owned firms are particularly more likely to create completely new products, improve previous products, use new processes, and engage in both basic and applied R&D, and their efforts are reflected in substantially higher levels of patents and productivity. Immigrant owners are slightly less likely than natives to imitate products of others and to hire more employees. Delving into potential explanations of the immigrant-native differences, we study other characteristics of entrepreneurs, access to finance, choice of industry, immigrant self-selection, and effects of diversity. We find that the immigrant innovation advantage is robust to controlling for detailed characteristics of firms and owners, it holds in both high-tech and non-high-tech industries and, with the exception of productivity, it tends to be even stronger in firms owned by diverse immigrant-native teams and by diverse immigrants from different countries. The evidence from nearly all measures that immigrants tend to operate more innovative and productive firms, together with the higher share of business ownership by immigrants, implies large contributions to U.S. innovation and growth.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the text, highlighting the most significant topics and trends. This approach not only enhances searchability but provides connections that go beyond potentially domain-specific author-defined keywords.
:
company, entrepreneurial, venture, entrepreneur, entrepreneurship, ethnicity, ethnic, immigrant, immigrated, innovation, innovator, inventory, patent, innovate, patenting, immigrant entrepreneurs, native, immigration, migrant, innovative, innovating

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:
Metropolitan Statistical Area, American Economic Association, National Science Foundation, Current Population Survey, Longitudinal Business Database, World Bank, 1940 Census, Social Security, North American Industry Classification System, American Community Survey, Patent and Trademark Office, Longitudinal Employer Household Dynamics, Cornell Institute for Social and Economic Research, Business Register, Census Bureau Disclosure Review Board, Survey of Business Owners, George Mason University, Society of Labor Economists, Annual Survey of Entrepreneurs

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