Abstract
This study examines the main push and pull factors driving Hispanic self-employment in the USA by modeling the self-employment decision as a function of sectoral earnings differences, country of origin, and other factors. Findings indicate that a main reason Hispanics engage in self-employment is they can earn more working for themselves than in wage/salary work. Immigrants appear to be pushed into self-employment as a result of limited opportunities in the wage work sector. Although low relative earnings in wage/salary work could push workers with limited English proficiency into self-employment, our findings indicate barriers to this. Results suggest that workers pulled into self-employment are those with more work experience and a college degree. Workers who originate from Southern South America and Colombia have relatively high self-employment rates, while Mexico-origin workers have relatively low self-employment rates. We also uncover differences across Hispanic origin groups in terms of the influence of gender, education, and personal wealth on self-employment participation.
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Notes
PUMAs are statistical geographic areas defined for distribution of Public Use Microdata Sample (PUMS) data and American Community Survey estimates. PUMAs are built on census tracts and counties; cover the entirety of the USA, Puerto Rico, Guam, and the US Virgin Islands; and contain at least 100,000 people.
In some cases, the reporting of both wage and self-employment income might represent the holding of more than one job at a time (i.e., moonlighting) or it could indicate working part of the year for oneself and the rest of the year for an employer. The number of such cases should be small. Data from the Bureau of Labor Statistics for 2014 indicate that 3.2% of Hispanics worked more than one job simultaneously. According to the Kaufman Foundation, about 0.46% of Hispanic adults created a new business each month in 2015 (Fairlie et al. 2016).
These figures are obtained by exponentiating the earnings function coefficients in Table 2.
See the definition provided in the notes to Table 2.
Marginal effects in the probit model indicate percentage point rather than percentage change. To arrive at these percentage figures, the marginal effects were divided by the predicted probability of self-employment (0.0858).
These percentage figures are based on predicted values for self-employment of 0.0832 (Mexico) and 0.1493 (South America).
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Acknowledgments
This work is supported by the Agriculture and Food Research Initiative (AFRI) award No. 2016-69006-24831 from the USDA National Institute of Food and Agriculture. Financial support is gratefully acknowledged.
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Fisher, M., Lewin, P.A. Push and pull factors and Hispanic self-employment in the USA. Small Bus Econ 51, 1055–1070 (2018). https://doi.org/10.1007/s11187-018-9987-6
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DOI: https://doi.org/10.1007/s11187-018-9987-6