Prosperity-Pull or Recession-Push?: Mexican Immigrant Self-Employment across the Business Cycle

• In Event: 469 - Section on International Migration Roundtables (one-hour)
  In Refereed Roundtable: Table 11. Immigrants and Labor Markets I

Abstract

Low-skilled immigrants are often the most at risk during business cycle downturns. While researchers often stress migrants moving back to their sending country, finding employment in ethnic economies, or moving to better-performing labor markets as the typical response to unemployment, evidence suggests that self-employment may serve as a survival strategy during business cycle downturns. However, the turn to self-employment in the face of unemployment is largely missing from the sociological literature associated with immigrant business formation. The goal of this paper, therefore, is to understand the origins of immigrant self-employment and its relationship to immigrant responses to unemployment. Immigrants may either be “pulled” into self-employment by the lure of high wages relative to wage and salary work, or they may be “pushed” into self-employment as a survival mechanism in the face of labor market disadvantages. Using Mexican immigrants as a test case, I create a unique panel dataset that captures face-paced labor market changes over the 1994 to 2013 period. I find that Mexican immigrants are more likely to become self-employed in economically bad times than in good times compared to native white workers. The threshold where Mexican immigrants have a higher rather than lower probability to become self-employment is at eight percent unemployment. These results filter throughout various subcategories and are consistent with recession-push hypotheses.

Author

• Peter Catron, University of California-Los Angeles