IZA study based on the Annual Survey of Entrepreneurs, a new database of 7,400 high-tech firms, shows that immigrant-owned businesses – in 15 of 16 measures – are more innovative than native-owned businesses

Much of the economic literature on immigration assumes that immigrants and native-born people are similar “factors of production” — theoretically interchangeable with one another. This study suggests that immigrants, at least in their entrepreneurial activity, have advantages over natives, rather than being similar to them or disadvantaged in any way.  Using the Annual Survey of Entrepreneurs (ASE), a new database from the U.S. Census Bureau analyzing 7,400 high-tech firms, the authors find “uniformly higher rates of innovation in immigrant-owned firms for 15 of 16 different innovation measures.” In most cases, the differences survive detailed controls for other demographic and human capital characteristics.  Roughly 20 percent of the owners in the studied firms were immigrants, a percentage higher than the 16 percent of immigrants in the general population. The ASE covers six different product innovations, four different process innovations, and seven different R&D activities.

Immigrant Entrepreneurs and Innovation in the U.S. High-Tech Sector,
IZA Institute of Labor Economics, February 2019, 34 pp.
Authors: J. David Brown et al