The Entrepreneurial Side of Immigration

by Russ Roberts on April 11, 2006

in Immigration

Immigrants are not a random selection of the world’s population. John Gartner explains in today’s Washington Post:

If you’ve been following the big immigration debate, you might get
the impression that the primary economic advantage of liberal economic
immigration policies is that they supply America with low-wage workers
willing to do grueling, unskilled jobs that native-born Americans won’t
touch. Not true: They are the source of America’s success.

secret to America’s wealth is that we were settled by restless, driven,
overconfident, risk-taking dreamers.

Gartner continues:

America is an amazing natural experiment — a continent populated
largely by self-selected immigrants. All these people had the
get-up-and-go to pull up stakes and come here, a temperament that made
them different from their friends and relatives who stayed home.
Immigrants are the original venture capitalists, risking their human
capital — their lives — on a dangerous and arduous voyage into the

Not surprisingly, given this entrepreneurial spirit,
immigrants are self-employed at much higher rates than native-born
people, regardless of what nation they emigrate to or from. And the
rate of entrepreneurial activity in a nation is correlated with the
number of immigrants it absorbs. According to a cross-national study,
"The Global Entrepreneurship Monitor," conducted jointly by Babson
College and the London School of Economics, the four nations with the
highest per capita creation of new companies are the United States,
Canada, Israel and Australia — all nations of immigrants. New company
creation per capita is a strong predictor of gross domestic product,
and so the conclusion is simple: Immigrants equal national wealth.

Andrew Carnegie, a 19th century Scottish immigrant and, quite a manic
personality, who started working in a factory for pennies a day and
became the richest man in the world by mass-producing steel, made the
same argument. Immigrants, he wrote, were unusually "capable, energetic
and ambitious" people. They had to be. "The old and the destitute, the
idle and the contented do not brave the waves of the stormy Atlantic,
but sit helplessly at home." He called the flow of people into America
the "golden stream" that contributed more to America’s wealth than "all
the gold mines in the world." It’s as true today as it was then. The
Scottish, Irish, Italians, Japanese and Eastern Europeans were last
century’s Mexicans — unwashed hordes, thought to be good only for
cheap labor.


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