Key Takeaways
- • Immigrants constituted 24.2 percent of new business owners in the US during 2014–2019, up significantly from 18.7 percent in 2007, demonstrating accelerating entrepreneurial participation despite representing only 14–15 percent of the overall population.
- • Analysis of the Longitudinal Employer-Household Dynamics database shows immigrant entrepreneurship share rising from 22.5 percent in 2003 to 28.9 percent in 2020, with immigrant founder representation exceeding 40 percent among venture-capital-backed and leading AI-related firms.
- • Self-employment data from the American Community Survey indicates immigrants comprise 21.5 percent of self-employed workers over 2016–2020, establishing consistent overrepresentation across multiple measurement methodologies and administrative datasets.
- • The research, detailed in NBER Working Paper 32400 by Chodavadia, Pekkala Kerr, Kerr, and Maiden, reveals that immigrants demonstrate disproportionately high entrepreneurial activity relative to their population share across disparate measurement techniques, with particularly elevated concentration in high-growth and technology-focused ventures.
Summary
A new National Bureau of Economic Research working paper quantifies the substantial and growing role of immigrants in US entrepreneurship, documenting persistent overrepresentation across multiple administrative datasets and business surveys. The research, conducted by Saheel Chodavadia, Sari Pekkala Kerr, William Kerr, and Louis Maiden, provides comprehensive evidence that immigrants account for roughly one-quarter of new business creation—a share significantly above their 14–15 percent representation in the broader population.
Measuring immigrant entrepreneurship presents methodological challenges, as government administrative datasets frequently lack reliable mechanisms to distinguish immigrants from native-born founders or to consistently identify business creation events. The researchers deployed multiple approaches to validate their findings. Self-employment data from the American Community Survey shows immigrants representing 21.5 percent of self-employed workers during 2016–2020. More comprehensive data from the Annual Business Surveys covering 2014–2019 reveal immigrant founders comprising 24.2 percent of new business owners, a substantial increase from 18.7 percent in 2007. Analysis of the Longitudinal Employer-Household Dynamics database—which isolates entrepreneurs by identifying the three highest-earning initial workers at newly created single-unit firms—demonstrates an even steeper upward trajectory, with immigrant entrepreneurship rising from 22.5 percent in 2003 to 28.9 percent in 2020.
The concentration of immigrant founders becomes particularly pronounced in high-growth and capital-intensive sectors. Immigrant founders exceed 40 percent of leading venture-capital-backed firms and AI-related companies, underscoring their disproportionate influence in innovation-driven segments critical to institutional investors. Across all measurement methodologies, immigrant entrepreneurship shares consistently exceed 20 percent, establishing robust evidence of systematic overrepresentation relative to demographic composition. These findings have material implications for understanding labor market dynamics, capital allocation patterns, and the sources of business formation and employment growth in the US economy.
Measuring immigrant entrepreneurship presents methodological challenges, as government administrative datasets frequently lack reliable mechanisms to distinguish immigrants from native-born founders or to consistently identify business creation events. The researchers deployed multiple approaches to validate their findings. Self-employment data from the American Community Survey shows immigrants representing 21.5 percent of self-employed workers during 2016–2020. More comprehensive data from the Annual Business Surveys covering 2014–2019 reveal immigrant founders comprising 24.2 percent of new business owners, a substantial increase from 18.7 percent in 2007. Analysis of the Longitudinal Employer-Household Dynamics database—which isolates entrepreneurs by identifying the three highest-earning initial workers at newly created single-unit firms—demonstrates an even steeper upward trajectory, with immigrant entrepreneurship rising from 22.5 percent in 2003 to 28.9 percent in 2020.
The concentration of immigrant founders becomes particularly pronounced in high-growth and capital-intensive sectors. Immigrant founders exceed 40 percent of leading venture-capital-backed firms and AI-related companies, underscoring their disproportionate influence in innovation-driven segments critical to institutional investors. Across all measurement methodologies, immigrant entrepreneurship shares consistently exceed 20 percent, establishing robust evidence of systematic overrepresentation relative to demographic composition. These findings have material implications for understanding labor market dynamics, capital allocation patterns, and the sources of business formation and employment growth in the US economy.
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