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What Accounts for the Overproportion of Immigrant Entrepreneurs?

Posted by: Jonathan Ortmans on May 21, 2009 Source: Policy Dialogue on Entrepreneurship

Another news article has highlighted the overproportion of entrepreneurs in places like Silicon Valley: over half (52.4 percent) of the startups contributing to innovation and wealth creation in that region have at least one immigrant founder. This New York Times article asks “Why this overproportion?” and presents some of the arguments that surrounding the debate on high-skilled immigration.
 
The first explanation relates to education. A large proportion of engineering students in the U.S. come from overseas. This observation raises questions about the quality of education in the U.S. Quality of higher education is clearly not the issue given that foreign students choose U.S. universities precisely for their quality. We still lead in university education. But the U.S. does lag behind in K-12 STEM education, which could explain students’ career choices.

An analysis of the education system in the U.S. is certainly welcome, but when it comes to the over-proportion issue, we must not just look at the skills, but rather at the fact that these high-skilled immigrants blend their skills with entrepreneurship. As Vivek Wadwha, the author of the studies that have unveiled the impact of high-skilled immigrants to our economy, has told us the reason why high-skilled immigration laws need reform is not that there is a shortage of engineers, but that those foreign immigrants in places like Silicon Valley are highly educated AND entrepreneurial, creating companies and more innovation.

The article touches on this “entrepreneurial spirit,” quoting opinion leaders like Mr. Wadwha arguing that the character of the immigrants themselves explains their disproportionate presence among the entrepreneurs and innovators of America. Immigrants are prone to take risks to climb the social ladder; they’ve got nothing to lose.

Other explanations of the astounding entrepreneurial contributions of high-skilled immigrants presented in the NYTimes article tend to distract attention from these contributions, among them that immigrant engineers are hired because they are cheaper. There is little evidence to support a decline in engineer salaries. Moreover, the high-skilled immigrants behind the overproportion statistics (e.g., the founders of Yahoo and Google born in Taiwan and Russia respectively) are precisely entrepreneurs; they create jobs rather take jobs.


Category:  Immigration 

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