Do ethnic enclaves and networks promote immigrant self-employment?

Toussaint-Comeau, Maude

Introduction and summary

Immigrants have a high tendency to be self-employed. I estimate that in the United States, the number of immigrant businesses rose from 2.7 million in 1997 to 3.3 million in 2002--an annual increase of 4 percent (compared with 2 percent yearly growth for all U.S. firms). (1) According to the Ewing Marion Kauffman Foundation, immigrants outpaced native-born Americans in new business start-ups: Immigrants had an entrepreneurial index activity rate that increased from 0.37 percent in 2006 to 0.46 percent in 2007, while that of the native born remained constant at 0.27 percent over the same period. (2)

Immigrants' businesses tend to be clustered in distinct neighborhoods, and they have become an integral and growing aspect of the vitality of metropolitan areas throughout the U.S. Scholars from various fields have studied the geographical concentration of immigrants in distinct locations across the U.S., as well as how this concentration affects immigrants' integration and assimilation into American society (Bartel, 1989). In this article, I focus on the relation between ethnic geographical concentration and the propensity for self-employment among immigrants to the U.S. I ask whether ethnic enclaves (geographical concentrations of an ethnic group) and ethnic networks (social or business networks among people of the same ethnicity, not necessarily living in proximity to one another) influence the decision by immigrants to be self-employed.

The relation between ethnic enclaves and self-employment remains unclear. Ethnic enclaves could affect the rate of self-employment of an immigrant group in different ways. On the one hand, these enclaves often provide prime settings for immigrant entrepreneurs to capture the market for "ethnic goods"--products (and services) that appeal strongly to members of a particular group. These entrepreneurs may have a comparative advantage in this type of market because they have more information on--as well as a better understanding of--the tastes and preferences of their own group. On the other hand, enclaves may be negatively related to self-employment for other reasons: Entry by potential immigrant entrepreneurs may become relatively difficult as established immigrants could block the entry of more recent immigrants. Also, some enclaves may be economically poor areas where residents have lower purchasing power, possibly restraining the potential for business growth. (3)

There are variations in geographical concentration patterns and self-employment rates among immigrant groups. For example, immigrants from Cuba tend to have relatively high geographical concentration in the U.S., as well as above-average rates of self-employment. For such groups, there certainly might be a link between ethnic enclaves and self-employment opportunities. Some other groups, for example, immigrants from India, are much more broadly dispersed, although they too have above-average rates of self-employment. For such groups, it is unlikely that their self-employment behavior is based solely on specialization in ethnic goods within ethnic enclaves. In general, immigrants with more human capital (higher education and job skills) are less likely to live in ethnic enclaves. Given this tendency, other job market factors and personal characteristics might play a greater role in the choice of self-employment among immigrant groups with a greater proportion of individuals who have more education and higher skills. Finally, some groups, such as Mexican immigrants, have ethnic geographical concentrations that are very large, but they remain relatively underrepresented in business ownership. This suggests that the "quality" of the social or business network within the ethnic enclave is also relevant.

I also examine the role of ethnic social and business networks in the choice of self-employment. Immigrant communities may be particularly good locations in which to form such networks. These communities tend to be relatively cohesive social units--often with a common language, culture, and religion. Since immigrants are, by definition, relative newcomers to a country, they are likely to experience problems in getting information on job opportunities or business opportunities (as well as on housing, schooling for their children, and other needs). This lack of information often generates a need for such social and business networks. Yet, it remains unclear how ethnic networks operate and how much they affect the self-employment status or other labor market outcomes of immigrants. For example, Munshi (2003) shows that ethnic networks help Mexican migrants find jobs in low-wage, labor-intensive sectors. If this is representative of how ethnic networks operate, then the existence of such networks might be associated with lower rates of self-employment.

In this article, 1 provide a brief survey of the literature on possible effects of ethnic enclaves and networks on self-employment rates among immigrants in the U.S. I use the U.S. Census Bureau's Public Use Microdata Samples (PUMS)--specifically, the 5 percent sample from the 2000 U.S. Decennial Census--to analyze the variations in self-employment rates, the characteristics, and industries of these immigrants from a variety of countries of origin. I also identify various locations across the U.S. with relatively large ethnic concentrations. Next, I conduct an empirical analysis to determine the factors that influence the decision to be self-employed, including assessing the effect of ethnic enclaves and networks. I find that ethnic networks have a positive effect on the decision for immigrants to be self-employed as an alternative to wage employment. Immigrants' personal characteristics such as years since migration, English language fluency, and education level are also important in their decision to be self-employed. However, I find no clear impact of ethnic geographical concentrations on the self-employment decision.

From a policy perspective, the recognition that self-employment could potentially enhance socioeconomic standing has inspired business development and funding initiatives that encourage self-employment among more vulnerable populations and communities, including immigrant ones. Thriving business communities benefit not only individual business owners but also local economies. Ethnic enclaves and networks may also be particularly important for immigrant populations because these populations are often underserved by mainstream financial institutions and businesses.

Review of literature

The role of ethnic enclaves and ethnic networks in the choice of self-employment among immigrants has been explored extensively in the sociology literature. Economists have also developed theories and models that incorporate informal nonmarket institutions, such as ethnic social networks.

According to Aldrich and Waldinger (1990, p. 127), "ethnic social structures consist of the networks of kinship and friendship around which ethnic communities are arranged, and the interlacing of these networks with positions in the economy (jobs), in space (housing), and in society (institutions)." Ethnic enclaves potentially provide environments where information can be shared more readily and easily and where ethnic business networks can thrive. They offer a protected market for ethnic goods production, and provide experience and apprenticeship from co-ethnic employers.

Ethnic networks can also play a role in mobilizing monetary and information resources for small businesses. For example, studies have found that financial resources raised through ethnic networks are critical for immigrant businesses, especially during the formation stage when entrepreneurs tend to have greater liquidity constraints (Van Auken and Neeley, 1998; and Anthony, 1999). Bond and Townsend (1996) find that Hispanic immigrant business owners in a Chicago neighborhood tend to seek financing in the informal sector (through ethnic networks) instead of the formal financial sector (through banks) because of their preference or cultural factors. They argue that these informal networks may be particularly efficient at facilitating financing arrangements at relatively lower information, search, and monitoring costs to the immigrants. Other studies have found that informal loan activities (for example, rotating credit associations) in ethnic networks are important to many different ethnic business communities (Min, 1988; Light, 1972; and Bonnett, 1981).

Ethnic enclaves are formed (or emerge) as a result of interconnected factors. Among the reasons often cited for immigrants to move to a particular area are the following: First, the area may be a port of entry, which historically has attracted a cluster of immigrants from the same country of origin; once the immigrants have established themselves in such an area, they tend to stay, since moving elsewhere is costly. Second, immigrants are often motivated to reunify with family, friends, and co-ethnic members who have already settled in the host country. Third, immigrants follow economic opportunities.

According to Chiswick and Miller (2002, p. 5), an ethnic enclave is distinguished by the fact that it is an environment where "the consumption characteristics of an immigrant/ethnic group [are] not shared with the host population." Chiswick and Miller (2002, p. 5) broadly define immigrants' consumption of ethnic goods as the consumption of "market and nonmarket goods and services, including social interactions for themselves and their children with people of the same origin." They imply that the economies of scale in the production of these ethnic goods lead to concentrations of co-ethnic businesses and institutions. However, ethnic networks may develop outside of ethnic enclaves, based on members' shared involvement in a business sector or niche (Bonacich and Modell, 1980).

Research suggests that shared language, culture, and information are key components to the creation of an "ethnic enclave effect," which is relevant for ethnic businesses and economic activities (see, for example, Lazear, 1999). Fafchamps (2001) finds that trust, maintained through repeated social interactions, leads to the emergence of spontaneous ethnic markets, causing traders' businesses to grow faster. Clark and Drinkwater (2000) explore the high rates of self-employment among ethnic minorities in England and Wales. In doing so, they extend the classic two-sector model of wage work and self-employment developed by Lucas (1978) and Evans and Jovanovic (1989) into a formal model of ethnic enclaves and self-employment outcomes. Clark and Drinkwater find that an ethnic enclave exerts a positive influence on the self-employment of immigrants as it shifts up the business's profit function for the immigrant (hence making self-employment among immigrants more attractive). They suggest that the potential explanation for this ethnic enclave effect is that the relative costs of production in the enclave are lower as the group in the ethnic enclave has a "better" distribution of knowledge and information-that is, greater access to ethnic networks and contacts, as well as familiarity with the tastes and preferences of the ethnic clientele.

Measuring the size of ethnic enclaves is difficult because most data sets do not provide information on the enclaves' geographical boundaries. Most previous studies have used neighborhoods' average characteristics, such as the proportion of an immigrant or language group in a metropolitan statistical area (MSA), to approximate neighborhood or enclave effects. (4) For example, using this measure, Borjas (1986) finds that Hispanics in the U.S. are more likely to be self-employed in areas (MSAs) that have larger Hispanic populations. However, he finds no "enclave effect" (the percentage of the ethnic minority in the MSA) on the decision to be self-employed among Asians. Alternatively, defining ethnic enclaves in terms of "language concentration" (the percentage of individuals who speak the same language in an MSA), Borjas (1986) finds no enclave effect for immigrants from English-speaking countries. This result is driven in part by the heterogeneity in culture and experience of immigrants from the large pool of English-speaking countries, including England, Jamaica, and the Philippines.

Measuring ethnic social and business networks is also difficult because few data sets contain information on relationships among individuals who make up an ethnic immigrant group. Borjas (1995) proposes a proxy for measuring a "network effect" based on ethnic group similarity. In essence, he uses the average characteristic of the group to measure the network effect. He refers to this as the "average quality" or "ethnic capital" of the group. He assumes that groups with more ethnic capital will transmit more skills to others within their respective groups or to subsequent generations, and this would be the mechanism by which ethnic capital operates.

Bertrand, Luttmer, and Mullainathan (2000) conduct a study on social networks and welfare culture in the U.S. Using the (non-English) language spoken at home, they proxy for the social links between minority individuals in a neighborhood. In other words, they measure the "quantity" of a social network for an individual as the number of people the minority individual "interacts" with through this language. Bertrand, Luttmer, and Mullainathan are also interested in the knowledge or attitude that the people who speak this language have about a particular activity (in this case, welfare participation). They measure the "quality" of the social network by counting the number of people in this language group who use welfare. In essence, they suggest that there is a social network effect because they find evidence that increased contact availability raises welfare use among those language groups that already have high welfare participation.

In this article, I use the conventional measure of ethnic geographical concentration and apply Bertrand, Luttmer, and Mullainathan's (2000) measure of social networks (the interaction between "quantity" and "quality") to explore the self-employment decision of immigrants in the U.S. 1 am interested in whether and to what extent the self-employment decision is affected by ethnic geographical concentrations and ethnic networks.

Characteristics of immigrants and self-employment rates

In my analysis of the self-employment rates of immigrants, 1 use the U.S. Census Bureau's Public Use Microdata Samples; in particular, 1 use the 5 percent sample taken from the 2000 U.S. Census. 1 restrict the sample population to immigrant males who are 25-54 years old and who live in a metropolitan statistical area. I focus on males because the inherent gender differences in labor market decisions would make a consideration of females' self-employment decisions a separate analysis; this is not within the scope of my article. To identify the ethnic immigrant groups, I select immigrant individuals based on their countries of origin (to be explicit, these individuals must have been born outside of the 50 U.S. states and the District of Columbia). (5) Further, I restrict this study to individuals in groups from countries of origin with 1,000 people or more sampled in the 5 percent PUMS from the 2000 U.S. Census. I do this because of concerns about interpreting results from too small a group sample size. These selection criteria leave me with a sample of 307,079 individual males--from 33 countries of origin in 297 metropolitan statistical areas and 1,572 public use microdata areas (PUMAs). (6)

Table 1 reports the characteristics of my population sample by the selected countries of origin (grouped by region (7)). Mexican immigrants make up 40 percent of the sample population. On average, they have less education than other immigrants. Over 40 percent of Mexican immigrants have less than a high school level of schooling. Immigrants from Puerto Rico, as well as those from South and Central America and the Caribbean, also have lower than average schooling. By contrast, the majority of immigrants from India and Pakistan; immigrants from Africa (notably those from Nigeria); and immigrants from various countries in Northeast Asia, Southeast Asia, and the Middle East have some college education. Similar to the differences in educational attainment, a much lower proportion of Mexican, South and Central American, and Caribbean immigrants speak English fluently than those from other countries. The differences in educational attainment and English language fluency are likely to influence the types of businesses (professional services or not) that the self-employed immigrants enter.

Table 1 also reports self-employment rates. Broadly speaking, immigrants from South and Central America, Southeast Asia, and the Caribbean tend to have lower average rates of self-employment (those from Cuba being a notable exception). By contrast, generally, immigrants from Northeast Asia, India, Pakistan, the Middle East, Europe, and Canada have higher average rates of self-employment. Differences exist among immigrants from different countries within the same region. For example, among immigrants from the Caribbean region, Cubans and Dominicans have relatively higher rates pf self-employment than Haitians and Jamaicans. Similarly, among immigrants from the Northeast Asia region, (North and South) Koreans (8) have a higher rate of self-employment compared with the other two large immigrant groups--the Chinese and the Japanese. All the immigrant groups from the Middle East region have a fairly sizable rate of self-employment. However, immigrants from Israel, Iran, and Lebanon have even higher rates of self-employment, ranging from 25 percent to 28 percent. Among immigrants from Europe, those from Italy and Poland have relatively much higher rates of self-employment, compared with those from Germany and France. The heterogeneity in self-employment status among immigrant groups suggests that it is useful to disaggregate them by country of origin as opposed to by region or common language.

Industries of self-employed immigrants

The types of industries that self-employed immigrants enter can provide useful insights as to the relative importance of location. For example, translation services and restaurants with specialty ethnic food may be characterized (more or less) as businesses that sell ethnic goods--defined earlier as products (and services) that draw a co-ethnic clientele. As such, self-employed individuals in these types of businesses would more likely be in a location with a potential co-ethnic market. By contrast, other businesses such as taxi services and landscaping services are less likely to be dependent on a co-ethnic market.

I summarize here the most common industries in which some immigrant groups start their own businesses (see the appendix for more details). The most common industries for self-employed Mexican immigrants are construction, landscaping, and auto repair. Some of the top industries for self-employed immigrants from Jamaica and Haiti are taxi and limousine services, auto repair, and restaurants. Physician office services, computer design, and insurance services are also among the top industries for self-employed Haitians. Self-employed Cuban immigrants tend to be in construction, but they are, for the most part, fairly dispersed over a wide range of industries, including truck transportation, auto repair, real estate, and physician office services.

Among immigrants from the Northeast Asia region, particularly those from China and (North and South) Korea, most of the businesses are restaurants and other food services. Dry cleaning and laundry facilities are also popular industries for self-employed Chinese and Korean immigrants.

The industry mix is slightly different for immigrants from the Southeast Asia region. The top industries reported by immigrants from Vietnam are nail salons, followed by restaurants and other food services. The main business activities for immigrants from Laos are crop production from farming. They also list restaurants and other food services as their other most popular choice for self-employment.

Some top industries for self-employed Indian and Pakistani immigrants are physician office services, grocery stores, taxi and limousine services, restaurants, and construction.

Immigrant entrepreneurs from Israel report construction and real estate, as well as grocery stores, as their top industries. For self-employed immigrants from Iran, construction, beauty salons, and taxi and limousine services are among their top industries.

Self-employed immigrants from Africa--specifically, immigrants from Nigeria and Ethiopia--are concentrated mostly in taxi and limousine services; beyond that, their businesses are in a wide range of industries.

The variety of immigrant businesses listed here suggests that, while some may not require English language skills to operate, they are not necessarily catering exclusively to an ethnic clientele in an ethnic enclave.

Where are immigrants located?

To identify where immigrants are located across metropolitan statistical areas in the U.S., and to assign a value to the potential size of their ethnic enclaves, I look at the total number of persons in the entire 2000 U.S. Census from the same country of origin living in an MSA as a percentage of the MSA's overall population (see table 2, panel A). I show the top three MSAs for each ethnic immigrant group, I also look at the population of each ethnic immigrant group in its respective top three MSAs relative to the group's overall population in the country (see table 2, panel B). So, where are ethnic immigrant groups concentrated?

To start with, Miami is the clear location of geographical concentration for Cubans. They make up 23 percent of the population of Miami (table 2, panel A). Los Angeles; New York City; Chicago; Miami; Orlando, Florida; and Washington, DC, receive the largest shares of all the immigrants from South and Central America (table 2, panel B). Places like McAllen-Edinburg-Mission, Laredo, and El Paso in Texas have sizable portions of their populations (25 percent or above) originating from Mexico (table 2, panel A).

Immigrants from Southeast Asia and Northeast Asia also have visible percentages in some MSAs, as seen in panel A of table 2. For example, over 7 percent of the population in San Francisco is from China. Nearly 9 percent of the population of Honolulu, Hawaii, is from the Philippines. And about 5 percent of the population of San Jose, California, is from Vietnam.

African immigrants generally represent a very small percentage in any MSA (table 2, panel A). However, the largest shares of African (Nigerian and Ethiopian) immigrants are in Washington, DC, New York City, and Atlanta (table 2, panel B).

Haitian and Jamaican immigrants have the largest share of their population in New York City, Miami, and Fort Lauderdale. Florida (table 2, panel B).

The panels in figure 1 (pp. 38-39) display graphically the relationship between the ethnic concentration levels of selected immigrant populations in MSAs and their self-employment rates. (The ethnic concentration level here is defined as the percentage of the immigrant group, irrespective of age or gender, in an MSA divided by the percentage of the immigrant group in the entire country.) There is a tendency for Mexican immigrants to have higher rates of self-employment in MSAs with larger shares of their population (panel A). Interestingly, the reverse is true for the other groups. Immigrants from the other ethnic immigrant groups exhibit either equally representative self-employment rates in all the different MSAs, regardless of their respective population share (for example, immigrants from Cuba), or they have higher rates of self-employment in places with lower shares of their populations (for example, immigrants from Haiti, Nigeria, the Philippines, and Vietnam).

Measuring ethnic networks

Following Bertrand, Luttmer, and Mullainathan (2000), I define ethnic network here as the interaction between the size of the network (the conventional measure of ethnic enclave) and the quality of the network:

[NETWORK.sub.jk] [approximately equal to] [E.sub.jk] x [Q.sub.k].

where [E.sub.k] is the "ethnic enclave" of a person from a country of origin group k living in area j, defined as follows:

[E.sub.jk] = ln Number of people from group k in area j / Total population in area j/ Number of people from group k / Total population in country

Note that the percentage of the group in the MSA is divided by the group proportion in the U.S. This instills the interesting property whereby if individuals in a particular group are evenly distributed across areas, the measure will equal to 1 for all people in that group (or it will equal 0, in log form).

[FIGURE 1 OMITTED]

Here, [Q.sub.K] stands for the quality of the networks or the "'knowledge" and "attitude" of others from the country of origin group k. This is measured by the average self-employment rate of the group in the U.S. For ease of interpretation of the "network effect" (the interaction term between [E.sub.jk] and [Q.sub.K]), independent of the pure "enclave effect," I subtract [E.sub.jk], an adjusted measure of self-employment plus the deviation of the average self-employment rate of ethnic immigrant group k from the average self-employment rate of the entire U.S. population sample. Hence, I redefine "'network quality" as follows:

[Q.sub.k] = [SELFEMP.sub.k] - [SELFEMP].

Table 3 reports the average values of the two measures--the "enclave effect" measure ([E.sub.jk]) and the interaction term, or "network effect" ([NETWORK.sub.jk] [approximately equal to] [E.sub.jk] x [Q.sub.K]), for each of the 33 immigrant groups. (To make the results easier to see, the ethnic immigrant groups' countries of origins are arranged by decreasing order of magnitude of the enclave effect measure.)

Table 3 shows that the Cubans, the Dominicans, the Haitians, the Iraqis, the Jamaicans, the Polish, and the Chinese are the most spatially concentrated immigrant groups in the sample. Other immigrant groups such as Israelis, Mexicans, Egyptians, Nigerians, and Indians are fairly dispersed. French and German immigrants, as well as Canadian ones, are the most widely dispersed.

Table 3 also shows that Israeli, Cuban, Iranian, Iraqi, Lebanese, Korean, Italian, and Polish immigrants have some of the highest average values for ethnic networks. By contrast, Mexicans, El Salvadorans, Laotians, and Filipinos, as well as Haitians, have lower average values of ethnic networks relative to the average value for all immigrants.

The results reported in table 3 suggest that ethnic geographical concentration (enclaves) and ethnic networks may operate in different ways and have different effects. To illustrate this, I group immigrants into the following four categories: 1) those with above-average (or high) geographical concentration and above-average (or high) self-employment rates (business/social networks); 2) those with above-average (or high) geographical concentration and below-average (or low) self-employment rates; 3) those with below-average (or low) geographical concentration and above-average (or high) self-employment rates; and 4) those with below-average (or low) geographical concentration and below-average (or low) self-employment rates. Table 4 displays where the immigrant groups from the different countries are placed within these four categories.

Regression analysis

I now turn to a multivariate analysis to evaluate in a more rigorous manner the impact of ethnic concentration and ethnic networks on the self-employment decision among immigrants. To do so, I estimate a linear probability model of self-employment choice in which the right-hand side contains, in addition to ethnic network and ethnic concentration, personal characteristics--namely, education, proficiency in English, years since migration, age, marital status, and race. (As mentioned previously, I only perform this analysis for the immigrant male population aged 25-54 in my sample.) Table 5 displays the results.

The results for all the covariates are consistent with expectations. Years since migration raise (at a decreasing rate)the probability of self-employment, consistent with previous research (Borjas, 1986). Relative to the omitted category (those with only a high school diploma), those with some high school level of education (who did not graduate) have a higher probability of being self-employed, while those with very low education (less than a high school level education) have a lower probability of being self-employed. The result that very low education hampers self-employment propensity is consistent with previous findings. Individuals with more education or human capital may be positively self-selected for self-employment for several reasons. Business owners" human capital may influence the businesses' viability (Bates, 1990). The educational attainment of entrepreneurs might also help facilitate financing opportunities and business success as it can serve as a basis for screening in lenders' evaluations (Cressy, 1996). Even so, table 5 shows that those with some college education have a lower probability of being self-employed relative to high school graduates. This finding suggests that increasing returns to schooling in the labor market make the opportunity costs of wage employment higher for college graduates.

Immigrants who speak English "well" or "very well" have a higher probability of being self-employed compared with those who do not speak English. This finding is consistent with previous research (Fairlie and Meyer, 1996).

I now turn to the ethnic network effect and ethnic enclave effect. Prior to discussing the results, it is instructive to briefly discuss the econometrics of the identification strategy. One concern was to ensure that the effects of ethnic networks and ethnic enclaves were not really being driven by characteristics that are affecting self-employment but are correlating with the ethnic measures. I address this concern by adopting the Bertrand, Luttmer, and Mullainathan (2000) strategy; I use the stepwise approach as presented in their paper. The fact that the effects remain positive and significant even as l successively augment the model with the explanatory variables shows their robustness. The group fixed effects dummies and the PUMA fixed effects dummies allow me to control for potential "unobservable" characteristics (such as ability or motivation). The PUMA fixed effects dummies allow me to control for differential neighborhood effects, addressing Manski's (2000) "reflection problem." (9)

In the first column of table 5, I begin with a regression that contains the ethnic enclave size effect variable, the relative ethnic network effect indicator variable, and the dummy variables for the country of origin group and PUMAs (the coefficients of those dummy variables are not listed, since there are too many). In the second column, l introduce the variables for age, marital status, race, and education. The network effect coefficient barely changes. In the third column, I add the remaining controls--the English language proficiency and the years since migration. The network effect coefficient increases very slightly. Overall, l note that across all the specifications the ethnic network positively affects the choice of self-employment for immigrants. The results suggest that a 1 percentage point higher ethnic network corresponds to a 1.5 percent increase in the likelihood that an individual will become self-employed.

The results for the ethnic enclave effect are in contrast with those for the ethnic network effect. The ethnic enclave effect has a coefficient of nearly zero across all the specifications, suggesting that there is no clear impact of ethnic geographical concentration on the self-employment decision and that immigrants overall tend to be equally likely to be self-employed, regardless of their population density in an MSA. (This finding was also apparent in figure 1 on pp. 38-39 for immigrants from several countries.)

What make ethnic networks operate?

I find that ethnic networks affect positively the likelihood that immigrants are self-employed. In this section, I discuss the mechanisms by which these networks could operate. If, as I found in table 5, ethnic networks promote the choice of self-employment for immigrants, they should have a greater influence on the self-employment decision of individuals with a relative disadvantage in the wage sector due to their personal characteristics. To test for this supposition, I reestimate the models for self-employment by adding an interaction term between ethnic network and the characteristics of individuals--namely, years since migration, English language proficiency, and education. A positive coefficient for these interaction terms would signal that the network exerts a greater positive effect on the self-employment decision of individuals with particular characteristics.

The results are reported in table 6. The first row of this table shows how the network effect varies with years since migration. The positive coefficient signals that the network effect appears to be more important if the individuals have resided in the U.S. for a longer period. Intuitively, although recent immigrants are likely to have greater information problems, which generate the need for networks, the startup costs of business are likely to be a deterrent to entry for more recent cohorts (Borjas, 1986). This result suggests that the longer the immigrants reside in the U.S., the better they may be able to take advantage of available information through networks and realize their goal of self-employment.

English language proficiency allows immigrants to organize and operate their businesses, communicate with customers who may not belong to the same ethnic group, and adhere to legally mandated practices. It may also allow the immigrants to become financially assimilated and access formal financial markets, and it may provide a positive signal to financial institutions. However, for individuals who do not speak English, the ethnic network should mitigate the costs of language deficiencies for self-employment. This appears to be consistent with the finding in the second row of table 6, which shows the interaction between English language proficiency and network to be statistically insignificant. This suggests that the fact of speaking English fluently does not confer a significant advantage over those who do not speak English fluently, provided the immigrant is in a position to benefit from an ethnic network.

The third and fourth rows show how the network effect varies with education. The results suggest that the ethnic network may be more important in increasing the chances of self-employment if individuals have some high school level of education. In contrast, the network is relatively less important in terms of the self-employment status for immigrants who are highly educated (those with college degrees).

Conclusion

in this article, 1 provide an overview of the literature on ethnic enclaves and networks. I discuss, define, and measure these two concepts, and then assess the mechanisms through which they affect the self-employment decisions of immigrants in the U.S. Then, I analyze the data, present the descriptive statistics, and conduct empirical analyses to reaffirm some of the intuitive results gleaned from the data. 1 find that ethnic networks play a positive role in the likelihood that immigrants will choose self-employment as an alternative to wage employment. Immigrants' personal characteristics such as years since migration, English language proficiency, and education level are also important in their decision to be self-employed. However, I find no clear impact of ethnic geographical concentrations on the self-employment decision.

From a policy point of view, the role of self-employment in potentially enhancing the socioeconomic standing of more vulnerable populations and communities, including immigrant ones, has inspired initiatives that encourage self-employment. The findings from this article provide some insights into self-employment among immigrant groups--an important avenue toward economic integration and socioeconomic mobility.

APPENDIX: TOP TEN INDUSTRIES OF SELF-EMPLOYED IMMIGRANTS

Region/                   1               2                3
Country of origin

South and Central America

                                    Taxi and
                                    limousine        Auto
Columbia            Construction    services         repair

                                    Landscaping      Truck
El Salvador         Construction    services         transportation

                                    Landscaping      Auto
Guatemala           Construction    services         repair

                                    Landscaping      Auto
Mexico              Construction    services         repair

                                    Services to      Taxi and
                                    buildings and    limousine
Peru                Construction    dwellings        services

Middle East

                    Taxi and        Restaurants
                    limousine       and other
Egypt               services        food services    Construction

                                                     Taxi and
                                    Beauty           limousine
Iran                Construction    salons           services

                                    Grocery          Liquor
Iraq                Construction    stores           stores

                                    Real             Grocery
Israel              Construction    estate           stores

                                                     Auto
Lebanon             Construction    Restaurants      repair

                                    Restaurants      Taxi and
                                    and other        limousine
Turkey              Construction    food services    services

Africa

                    Taxi and
                    limousine       Truck            Beauty
Ethiopia            services        transportation   salons

                    Taxi and
                    limousine       Technical/       Financial
Nigeria             services        consulting       investment

India/Pakistan

                                    Taxi and
                    Physician       limousine        Grocery
India               offices         services         stores

                    Taxi and
                    limousine       Grocery
Pakistan            services        stores           Construction

                                    Performing       Real
Canada              Construction    arts             estate

Europe

                                    Accommodations
                                    and food         Real
France              Construction    services         estate

                                    Performing       Technical/
Germany             Construction    arts             consulting

                                    Restaurants
                                    and other        Barber
Italy               Construction    food services    shops

                                                     Services to
                                    Truck            buildings
Poland              Construction    transportation   and dwellings

Caribbean

                                    Truck            Auto
Cuba                Construction    transportation   repair

                                    Taxi and
Dominican                           limousine        Grocery
Republic            Construction    services         stores

                    Taxi and
                    limousine                        Auto
Haiti               services        Construction     repair

                                                     Taxi and
                                    Auto             limousine
Jamaica             Construction    repair           services

                                    Auto             Truck
Puerto Rico         Construction    repair           transportation

Northeast Asia

                    Restaurants                      Taxi and
                    and other                        limousine
China               food services   Construction     services

                                    Restaurants
                                    and other        Performing
Japan               Construction    food services    arts

                                    Restaurants      Dry cleaning
                                    and other        and laundry
Korea               Construction    food services    services

Southeast Asia

                    Restaurants
                    and other                        Retail
Cambodia            food services   Construction     bakeries

                                    Restaurants
                    Crop            and other
Laos                production      food services    Construction

                                    Restaurants
                                    and other        Physician
Philippines         Construction    food services    offices

                    Restaurants
                    and other                        Auto
Thailand            food services   Construction     repair

                                    Restaurants
                    Nail            and other
Vietnam             salons          food services    Construction

Region/                   4                5                6
Country of origin

South and Central America

                                     Services to      Restaurants
                    Truck            buildings and    and other
Columbia            transportation   dwellings        food services

                                     Services to      Restaurants
                    Auto             buildings and    and other
El Salvador         repair           dwellings        food services

                                     Restaurants      Services
                    Truck            and other        to private
Guatemala           transportation   food services    households

                                     Restaurants
                    Truck            and other        Crop
Mexico              transportation   food services    production

                                     Services
                    Auto             to private       Truck
Peru                repair           households       transportation

Middle East

                    Offices of       Clothing and     Wholesale
Egypt               dentists         accessories      trade

                    Auto             Auto             Professional-
Iran                repair           dealers          engineering

                                     Taxi and
                    Auto             limousine        Real
Iraq                repair           services         estate

                    Taxi and
                    limousine        Arts/
Israel              services         entertainment    Restaurants

                    Jewelry,
                    luggage,
                    and leather      Grocery          Gas
Lebanon             goods stores     stores           stations

                    Wholesale                         Retail-
                    trade-           Manufacturing-   jewelry,
                    durable          wood             luggage,
Turkey              goods            product          and leather

Africa

                                     Retail           Gas
Ethiopia            Consulting       trade            stations

                                                      Physician
Nigeria             Bookkeeping      Construction     offices

India/Pakistan

                    Traveler         Computer
India               accommodations   design           Restaurants

                                     Restaurants
                    Physician        and other        Gas
Pakistan            offices          food services    stations

                                                      Computer
                    Legal            Technical/       design
Canada              services         consulting       and related

Europe

                                     Professional-
                                     technical        Computer
France              Restaurants      services         design

                    Legal            Real             Auto
Germany             services         estate           repair

                    Landscaping      Beauty           Auto
Italy               services         salons           repair

                                     Taxi and
                    Auto             limousine        Real
Poland              repair           services         estate

Caribbean

                    Landscaping      Real             Professional
Cuba                services         estate           services

Dominican           Auto                              Retail
Republic            repair           Restaurants      trade

                                     Services to
                                     buildings        Physician
Haiti               Transportation   and dwellings    offices

                                                      Services to
                    Truck            Landscaping      buildings
Jamaica             transportation   services         and dwellings

                    Landscaping      Real             Performing
Puerto Rico         services         estate           arts

Northeast Asia

                    Grocery          Consulting       Performing
China               stores           services         arts

                    Landscaping      Technical/       Wholesale
Japan               services         consulting       trade

                                     Clothing and
                    Grocery          accessories      Auto
Korea               stores           stores           repair

Southeast Asia

                    Taxi and         Personal/
                    limousine        household        Truck
Cambodia            services         goods repairs    transportation

                                                      Manufacturing-
                    Auto             Traveler         electrical
Laos                repair           accommodations   supplies

                    Insurance
                    carrier
                    and related      Auto             Real
Philippines         services         repair           estate

                    Retail           Real             Technical/
Thailand            trade            estate           consulting

                                     Beauty           Auto
Vietnam             Landscaping      salons           repair

Region/                     7                 8
Country of origin

South and Central America

                    Real                Landscaping
Columbia            estate              services

                    Services            Services
                    to private          incidental to
El Salvador         households          transportation

                    Services to
                    buildings           Real
Guatemala           and dwellings       estate

                    Services to
                    buildings           Retail
Mexico              and dwellings       trade

                    Landscaping         Real
Peru                services            estate

Middle East
                                        Professional-
                                        scientific/
                    Physician           technical
Egypt               offices             services

                    Physician           Legal
Iran                offices             services

                    Video
                    rental              Gas
Iraq                stores              stations

                    Physician
Israel              offices             Consulting

                    Clothing
                    and shoes           Wholesale
Lebanon             stores              trade

                                        Insurance
                    Dry cleaning        carrier
                    and laundry         and related
Turkey              facilities          services

Africa

                    Professional-
                    technical
Ethiopia            services            Construction

                    Wholesale
Nigeria             trade               Transportation

India/Pakistan

                    Truck
India               transportation      Construction

                    Retail              Wholesale
Pakistan            trade               trade

                                        Motion
                                        picture
                    Physician           and video
Canada              offices             services

Europe

                    Management
                    technical           Landscaping
France              consulting          services

                    Trusts, funds,
                    securities,
                    and financial       Physician
Germany             services            offices

                    Performing          Legal
Italy               arts                services

                    Restaurants         Services
                    and other           to private
Poland              food services       households

Caribbean

                                        Services to
                    Physician           buildings
Cuba                offices             and dwellings

Dominican           Truck               Real
Republic            transportation      estate

                                        Truck
Haiti               Restaurants         transportation

Jamaica             Bookkeeping         Restaurants

                    Services to
                    buildings           Beauty
Puerto Rico         and dwellings       salons

Northeast Asia

                                        Securities,
                    Dry cleaning        funds, and
                    and laundry         financial
China               services            services

                                        Computer
                    Legal               design
Japan               services            and related

                    Services to
                    buildings           Real
Korea               and dwellings       estate

Southeast Asia
                                        Manufacturing-
                    Agriculture-        seafood
                    fishing, hunting,   and other
Cambodia            and trapping        miscellaneous

                    Jewelry,
                    luggage,            Manufacturing-
                    and leather         fabric
Laos                goods stores        mills

                    Legal               Landscaping
Philippines         services            services

                    Administrative      Miscellaneous
                    and waste           retail
Thailand            management          trade

                    Agriculture-
                    fishing, hunting,   Real
Vietnam             and trapping        estate

Region/                   9                10
Country of origin

South and Central America

                    Technical/       Retail
Columbia            consulting       trade

                    Professional-    Grocery
El Salvador         engineering      stores

                    Specialty        Car
Guatemala           food stores      washes

                                     Services
                    Auto             to private
Mexico              dealers          households

Peru                Restaurants      --

Middle East

                    Dry cleaning
                    and laundry      Liquor
Egypt               facilities       stores

                                     Retail-
                                     furniture/
                    Real             home
Iran                estate           furnishing

                    Manufacturing-   Beauty
Iraq                printing         salons

                    Nondepository
                    credit           Legal
Israel              and related      services

                    Taxi and
                    limousine        Physician
Lebanon             services         offices

                    Auto             Gas
Turkey              repair           stations

Africa

                    Auto
Ethiopia            repair           Transportation

                                     Nondepository
                    Professional-    credit and
Nigeria             engineering      related

India/Pakistan

                    Financial        Technical/
India               investment       consulting

                    Truck            Auto
Pakistan            transportation   repair

                    Securities,
                    funds, and
                    financial        Auto
Canada              services         repair

Europe

                    Financial        Technical/
France              investment       consulting

                                     Professional-
                                     scientific/
                    Professional-    technical
Germany             engineering      services

                    Trusts, funds,
                    securities,
                    and financial    Real
Italy               services         estate

                                     Computer
                    Technical/       design and
Poland              consulting       related

Caribbean

                    Accommodations   Restaurants
                    and food         and other
Cuba                services         food services

                    Retail trade-    Grocery and
Dominican           other direct     related
Republic            establishments   wholesalers

                                     Insurance
                                     carrier and
                    Computer         related
Haiti               design           services

                    Real
Jamaica             estate           Artist

                    Taxi and         Restaurants
                    limousine        and other
Puerto Rico         services         food services

Northeast Asia

                                     Computer
                    Wholesale        design
China               trade            and related

                    Specialized
                    design           Real
Japan               services         estate

                    Physician        Liquor
Korea               offices          stores

Southeast Asia

                    Landscaping      Auto
Cambodia            services         repair

                                     Computer
                    Grocery          design
Laos                stores           and related

                    Accounting,
                    bookkeeping      Technical/
Philippines         services         consulting

                                     Gift,
                                     novelty,
                    Gas              and souvenir
Thailand            stations         shops

                                     Manufacturing-
                    Grocery          cut and
Vietnam             stores           sew apparel

Notes: For convenience. Mexico is put in the South and Central
America group, although only southern Mexico is typically considered
part of Central America. The population from the U.S. overseas
territory Puerto Rico is included, although individuals from there
are technically not immigrants. The U.S. Census data do not specify
whether the immigrants from Korea are from North Korea or South
Korea (two distinct nations), but here the immigrants from Korea are
considered to be those from both North Korea and South Korea.

Source: U.S. Census Bureau. 2000 Decennial Census. Public Use
Microdata Samples. 5 percent sample.

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Light, I., 1979, "Disadvantaged minorities in self-employment," International Journal of Comparative Sociology, Vol. 20, No. 1-2, pp. 31-45.

--, 1972, Ethnic Enterprise in America: Business and Welfare among Chinese, Japanese, and Blacks, Berkeley, CA: University of California Press.

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Manski, C., 2000, "Economic analysis of social interactions," Journal of Economic Perspectives, Vol. 14, No. 3, Summer, pp. 115-136.

McManus, W. S., 1990, "Labor market effects of ethnic enclaves: Hispanic men in the United States," Journal of Human Resources, Vol. 25, No. 2, pp. 228-252.

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NOTES

(1) I approximate this growth in the number of immigrant businesses over the period 1997-2002 based on data from the US Census Bureau's Decennial Census of Population and Housing. Profile of General Demographic Characteristics: 2000; 2002 Survey of Business Owners; and 1997 Survey of Minority-Owned Business Enterprises In 2002. there were 22,974,655 firms in total: 19,899,839 were white-owned: 1,573,464. Hispanic-owned: 1,197,567. black-owned: and 1,103,587, Asian-owned In 1997, there were 20,821,934 firms in total: 17.782,901 were white-owned: 1,199,896, Hispanic-owned; 912,959, Asian-owned; and 823,499, black-owned The estimates of the number of immigrants firms from these totals are based on the assumption that 5.8 percent of the white owners are immigrants, 66 percent of the Hispanic owners are immigrants, 11.8 percent of the black owners are immigrants, and 89 percent of the Asian owners are immigrants. (See www.census.gov/csd/sbo/chartable_a.xls_and www.census.gov/prod/ec97/e97cs-1.pdf.)

(2) See www.kauffman.org/items.cfm?itemID=1036 The Kauffman Index of Entrepreneurial Activity is derived from the U.S. Census Bureau's monthly Current Population Survey (CPS) Using detailed demographic information on race. education, region, age. and immigrant status, the Kauffman Index of Entrepreneurial Activity captures all adults aged 20-64 who initially start a business (in the business's first month), including those who own incorporated or unincorporated businesses and those who are employers and nonemployers.

(3) See Light (1979). Wilson and Portes (1980), Evans (1989), Lazear (1999). McManus (1990). Aldrich et al (1985), Chiswick and Miller (2002). Sanders and Nee (1996). and Bates (1990, 1996).

(4) The literature covers research of neighborhood effects on a wide variety of individual behaviors, including welfare participation. crime, drug use. educational attainment, and sexual behaviors. See. for example, Case and Katz (1991); Nechyba (1996); Glaeser, Sacerdote. and Scheinkman (1996); Borjas (1995); Bertrand, Luttmer, and Mullainathan (2000); Munshi (2003): and Topa (2001).

(5) People from U.S. overseas territories, such as Puerto Ricans, although not technically immigrants, may be included insofar as the U.S. Census asks them about when they came to the United States and whether they speak English or a different language at home.

(6) PUMAs are areas whose boundaries are defined by the US Census Bureau; each PUMA has a population of 100,000 or more.

(7) For convenience. I put Mexico in the South and Central America group, although only southern Mexico is typically considered part of Central America.

(8) The U.S. Census data do not specify whether the immigrants from "'Korea" are from North Korea or South Korea (two distinct nations), but I consider the immigrants from Korea to be those from both North Korea and South Korea.

(9) Some critics point out that findings of positive correlations between self-employment choice and neighborhood ethnic concentration are only suggestive of the network effect Manski (2000) refers to this situation as the "reflection problem"--an inherent problem in studying social interaction effects due to the inability to control for correlated unobserved characteristics within the community. For example, areas may have high self-employment for a variety of reasons (for example, favorable small business entry policies and better zoning regulations that encourage small shopping malls). This would make individuals in the area more likely to be sell-employed.

Maude Toussaint-Comeau is an economist in the Economic Research Department at the Federal Reserve Bank of Chicago. She thanks Phil Doctor for valuable research assistance. She thanks Anna Paulson, Leslie McGranahan. Ellen Rissman, Gadi Barlevy, and Ludovic Comeau, Jr., for valuable comments and suggestions.

TABLE 1
Characteristics of immigrants

                                             Share
                                         with less than    Share with
Region/                       Sample      high school     some college
Country of origin           population     education       education

                                                   percent
U.S. nonimmigrant
  sample population          2,024,918          5              61
Immigrant                      307,079         23              42

South and Central America
Columbia                         5,916          9              53
El Salvador                     12,372         39              18
Peru                             3,573          4              59
Guatemala                        6,904         41              20
Mexico                         123,383         44              15

Middle East
Iraq                             1,190         11              50
Iran                             4,341          1              85
Egypt                            1,761          1              85
Israel                           1,790          2              67
Lebanon                          1,770          4              74
Turkey                           1,207          6              71

Africa
Ethiopia                         1,038          2              72
Nigeria                          2,280          0              89

India/Pakistan

Pakistan                         3,505          4              72
India                           15,281          1              87

Europe
Poland                           4,637          3              52
Italy                            4,325          9              51
France                           2,163          1              80
Germany                          9,643          1              76

Canada                           7,659          1              80

Caribbean
Haiti                            5,087         10              46
Jamaica                          5,772          5              48
Dominican Republic               7,372         21              31
Cuba                             9,636          6              48
Puerto Rico                     13,301         12              37

Northeast Asia
China                           10,942         12              64
Korea                            1,470          2              81
Japan                            4,927          1              84

Southeast Asia
Laos                             2,494         22              36
Cambodia                         1,682         38              43
Philippines                     14,846          2              80
Vietnam                         13,594         11              54
Thailand                         1,218          3              74

                               Share
                             who speak       Self-
Region/                     English well   employment
Country of origin           or very well      rate

                                      percent
U.S. nonimmigrant
  sample population              --            11
Immigrant                        71            11

South and Central America
Columbia                         71            12
El Salvador                      59             8
Peru                             74            11
Guatemala                        56             9
Mexico                           52             8

Middle East
Iraq                             88            19
Iran                             95            25
Egypt                            94            16
Israel                           97            28
Lebanon                          97            25
Turkey                           90            18

Africa
Ethiopia                         96            11
Nigeria                          99            13

India/Pakistan
Pakistan                         94            16
India                            96            11

Europe
Poland                           77            15
Italy                            95            20
France                           98            12
Germany                          99            11

Canada                           99            14

Caribbean
Haiti                            85             7
Jamaica                          99             9
Dominican Republic               60            11
Cuba                             69            16
Puerto Rico                      86             6

Northeast Asia
China                            69            11
Korea                            80            24
Japan                            89            11

Southeast Asia
Laos                             75             7
Cambodia                         75            12
Philippines                      96             5
Vietnam                          72            11
Thailand                         87            10

Notes: The sample here is made up of immigrant males aged 25-54 who
live in a metropolitan statistical area. (The U.S. nonimmigrant male
sample population, also aged 25-54, is provided for the sake of
comparison.) For convenience, Mexico is put in the South and Central
America group, although only southern Mexico is typically considered
part of Central America. The population from the U.S. overseas
territory Puerto Rico is included, although individuals from there
are technically not immigrants. The U.S. Census data do not specify
whether the immigrants from Korea are from North Korea or South
Korea (two distinct nations), but here the immigrants from Korea are
considered to be those from both North Korea and South Korea.

Source: Author's calculations based on data from the U.S. Census
Bureau, 2000 Decennial Census, Public Use Microdata Samples, 5
percent sample.

TABLE 2
Location of immigrants

Region/
Country of origin    First MSA             Percentage

A. Top three MSAs for each immigrant group

South and Central America
Mexico               Laredo, TX               28.5

El Salvador          Los Angeles-              2.6
                     Long Beach, CA
Guatemala            Los Angeles-              1.6
                     Long Beach, CA
Columbia             Miami, FL                 3.6
Peru                 Jersey City, NJ           1.5

Middle East
Iran                 Los Angeles-              1.0
                     Long Beach, CA
Iraq                 Modesto, CA               0.7
Israel               Myrtle Beach, SC          0.3
Egypt                Jersey City, NJ           1.1
Lebanon              Lawrence, MA-NH           0.4
Turkey               Bergen-Passaic, NJ        0.4

Africa
Ethiopia             Sioux Falls, SD           0.3
Nigeria              Houston, TX               0.3

India/Pakistan
India                Middlesex-Somerset-
                     Hunterdon, NJ             4.0
Pakistan             New York, NY              0.4

Europe
France               San Francisco, CA         0.3
Germany              Killeen-Temple, TX        3.7
Italy                Waterbury, CT             1.7
Poland               Hartford, CT              1.9

Canada               Bellingham, WA            3.4

Caribbean
Cuba                 Miami, FL                22.9
Dominican Republic   Lawrence, MA-NH           6.6
Haiti                Miami, FL                 3.1
Jamaica              Fort Lauderdale, FL       3.6
Puerto Rico          Waterbury, CT             7.8

Northeast Asia
China                San Francisco, CA         7.3
Japan                Honolulu, HI              2.6
Korea                Honolulu, HI              0.3

Southeast Asia
Laos                 Wausau, WI                2.1
Cambodia             Lowell, MA-NH             2.0
Philippines          Honolulu, HI              8.8
Thailand             Merced, CA                0.9
Vietnam              San Jose, CA              5.2

Region/
Country of origin    Second MSA                   Percentage

A. Top three MSAs for each immigrant group

South and Central America
Mexico               McAllen-Edinburg-               27.5
                     Mission, TX
El Salvador          Washington, DC-MD-VA             2.2
Guatemala            Stamford-Norwalk, CT             1.5
Columbia             Jersey City, NJ                  2.2
Peru                 Miami, FL                        1.1

Middle East
Iran                 Modesto, CA                      0.8
Iraq                 Detroit, MI                      0.7
Israel               New York, NY                     0.3
Egypt                Middlesex-Somerset-              0.4
                     Hunterdon, NJ
Lebanon              Detroit, MI                      0.4
Turkey               Nassau-Suffolk, NY               0.2

Africa
Ethiopia             Washington, DC-MD-VA             0.3
Nigeria              Washington, DC-MD-VA             0.3

India/Pakistan
India                Yuba City, CA                    3.2
Pakistan             Middlesex-Somerset-              0.4
                     Hunterdon, NJ

Europe
France               Stamford-Norwalk, CT             0.3
Germany              Clarksville-                     3.4
                     Hopkinsville, TN-KY
Italy                Bergen-Passaic, NJ               1.3
Poland               Chicago, IL                      1.7

Canada               Nashua, NH                       2.0

Caribbean
Cuba                 Jersey City, NJ                  4.5
Dominican Republic   Jersey City, NJ                  4.2
Haiti                Fort Lauderdale, FL              2.7
Jamaica              New York, NY                     2.1
Puerto Rico          Vineland-Millville-              5.7
                     Bridgeton, NJ

Northeast Asia
China                San Jose, CA                     4.2
Japan                San Jose, CA                     0.7
Korea                Boulder-                         0.3
                     Longmont, CO

Southeast Asia
Laos                 Fresno, CA                       1.6
Cambodia             Stockton-Lodi, CA                0.9
Philippines          Vallejo-Fairfield-Napa, CA       5.1
Thailand             Fresno, CA                       0.6
Vietnam              Orange County, CA                3.8

Region/
Country of origin    Third MSA                  Percentage

A. Top three MSAs for each immigrant group

South and Central America
Mexico               El Paso, TX                   25.1
El Salvador          San Francisco, CA              1.8
Guatemala            Trenton, NJ                    1.3
Columbia             Fort Lauderdale, FL            1.9
Peru                 Bergen-Passaic, NJ             1.1

Middle East
Iran                 Orange County, CA              0.7
Iraq                 San Diego, CA                  0.3
Israel               Bergen-Passaic, NJ             0.3
Egypt                Trenton, NJ                    0.2
Lebanon              Waterbury, CT                  0.3
Turkey               State College, PA              0.2

Africa
Ethiopia             Minneapolis-
                     St. Paul, MN-WI                0.2
Nigeria              Newark, NJ                     0.2

India/Pakistan
India                San Jose, CA                   2.8
Pakistan             Jersey City, NJ                0.4

Europe
France               Salinas, CA                    0.2
Germany              Fayetteville, NC               2.7
Italy                Stamford-Norwalk, CT           1.2
Poland               Bergen-Passaic, NJ             1.5

Canada               Fitchburg-Leominster, MA       2.0

Caribbean
Cuba                 Fort Lauderdale, FL            1.9
Dominican Republic   New York, NY                   4.1
Haiti                West Palm Beach-               2.3
                     Boca Raton, FL
Jamaica              Hartford, CT                   1.7
Puerto Rico          Springfield, MA                5.1

Northeast Asia
China                Oakland, CA                    3.4
Japan                Salinas, CA                    0.7
Korea                Rochester, MN                  0.3

Southeast Asia
Laos                 Merced, CA                     1.5
Cambodia             Modesto, CA                    0.6
Philippines          San Francisco, CA              4.5
Thailand             Stockton-Lodi, CA              0.5
Vietnam              Worcester, MA-CT               1.4

Region/
Country of origin    First MSA

B. Top three MSAs relative to each immigrant group's
population nationwide

South and Central America

Mexico               Los Angeles-Long Beach, CA
El Salvador          Los Angeles-Long Beach, CA
Guatemala            Los Angeles-Long Beach, CA
Columbia             New York, NY
Peru                 New York, NY

Middle East
Iran                 Los Angeles-Long Beach, CA
Iraq                 Detroit, MI
Israel               New York, NY
Egypt                New York, NY
Lebanon              Los Angeles-Long Beach, CA
Turkey               New York, NY

Africa
Ethiopia             Washington, DC-MD-VA
Nigeria              New York, NY

India/Pakistan
India                New York, NY
Pakistan             New York, NY

Europe
France               New York, NY
Germany              New York, NY
Italy                New York, NY
Poland               Chicago, IL

Canada               Los Angeles-Long Beach, CA

Caribbean
Cuba                 Miami, FL
Dominican Republic   New York, NY
Haiti                New York, NY
Jamaica              New York, NY
Puerto Rico          New York, NY

Northeast Asia
China                New York, NY
Japan                Los Angeles-Long Beach, CA
Korea                Los Angeles-Long Beach, CA

Southeast Asia
Laos                 Minneapolis-St. Paul, MN-WI
Cambodia             Los Angeles-Long Beach, CA
Philippines          Los Angeles-Long Beach, CA
Thailand             Los Angeles-Long Beach, CA
Vietnam              Orange County, CA

Region/
Country of origin    Second MSA

B. Top three MSAs relative to each immigrant group's population
nationwide

South and Central America
Mexico               Chicago, IL
El Salvador          Washington, DC-MD-VA
Guatemala            New York, NY
Columbia             Miami, FL
Peru                 Miami, FL

Middle East
Iran                 Orange County, CA
Iraq                 Chicago, IL
Israel               Los Angeles-Long Beach, CA
Egypt                Los Angeles-Long Beach, CA
Lebanon              Detroit, MI
Turkey               Los Angeles-Long Beach, CA

Africa
Ethiopia             Atlanta, GA
Nigeria              Washington, DC-MD-VA

India/Pakistan
India                Chicago, IL
Pakistan             Chicago, IL

Europe
France               Los Angeles-Long Beach, CA
Germany              Washington, DC-MD-VA
Italy                Nassau-Suffolk, NY
Poland               New York, NY

Canada               Detroit, MI

Caribbean
Cuba                 Fort Lauderdale, FL
Dominican Republic   Miami, FL
Haiti                Miami, FL
Jamaica              Fort Lauderdale, FL
Puerto Rico          Orlando, FL

Northeast Asia
China                Los Angeles-Long Beach, CA
Japan                New York, NY
Korea                New York, NY

Southeast Asia
Laos                 Fresno, CA
Cambodia             Philadelphia, PA-NJ
Philippines          San Diego, CA
Thailand             Minneapolis-St. Paul, MN-WI
Vietnam              Los Angeles-Long Beach, CA

Region/
Country of origin    Third MSA

B. Top three MSAs relative to each immigrant group's population
nationwide

South and Central America
Mexico               Houston, TX                       31
El Salvador          Houston, TX                       53
Guatemala            Washington, DC-MD-VA              43
Columbia             Fort Lauderdale, FL               41
Peru                 Los Angeles-Long Beach, CA        32

Middle East
Iran                 Washington, DC-MD-VA              46
Iraq                 San Diego, CA                     54
Israel               Chicago, IL                       39
Egypt                Jersey City, NJ                   34
Lebanon              New York, NY                      40
Turkey               Bergen-Passaic, NJ                28

Africa
Ethiopia             Minneapolis-St. Paul, MN-WI       38
Nigeria              Houston, TX                       31

India/Pakistan
India                San Jose, CA                      21
Pakistan             Washington, DC-MD-VA              35

Europe
France               Washington, DC-MD-VA              21
Germany              Chicago, IL                       11
Italy                Chicago, IL                       32
Poland               Bergen-Passaic, NJ                51

Canada               Seattle-Bellevue-Everett, WA      13

Caribbean
Cuba                 New York, NY                      69
Dominican Republic   Bergen-Passaic, NJ                66
Haiti                Fort Lauderdale, FL               54
Jamaica              Miami, FL                         53
Puerto Rico          Philadelphia, PA-NJ               35

Northeast Asia
China                San Francisco, CA                 40
Japan                Honolulu, HI                      22
Korea                Washington, DC-MD-VA              31

Southeast Asia
Laos                 Sacramento, CA                    27
Cambodia             Seattle-Bellevue-Everett, WA      28
Philippines          San Francisco, CA                 28
Thailand             Washington, DC-MD-VA              24
Vietnam              San Jose, CA                      31

Notes: MSA means metropolitan statistical area. Panel B shows the top
three MSAs for each immigrant group as a pooled percentage of the
group's population nationwide (whereas panel A shows the top three
relative to each MSA's total population). For convenience, Mexico is
put in the South and Central America group, although only southern
Mexico is typically considered part of Central America. The population
from the U.S. overseas territory Puerto Rico is included, although
individuals from there are technically not immigrants. The U.S. Census
data do not specify whether the immigrants from Korea are from North
Korea or South Korea (two distinct nations), but here the immigrants
from Korea are considered to be those from both North Korea and South
Korea.

Source: Author's calculations based on data from the U.S. Census
Bureau, 2000 Decennial Census, Public Use Microdata Samples, 5
percent sample.

TABLE 3
Ethnic enclave and network indicators

Country               Enclave     Network
of origin            indicator   indicator

Cuba                   2.64        30.47
Dominican Republic     2.08         5.67
Haiti                  1.97        -8.62
Iraq                   1.52        27.11
Jamaica                1.40        -1.68
Poland                 1.34        14.29
China                  1.32         3.78
El Salvador            1.32        -3.36
Columbia               1.31         4.83
Ethiopia               1.22         3.99
Laos                   1.13        -6.93
Peru                   1.09         3.15
Cambodia               1.06         3.78
Philippines            1.06        -8.62
Guatemala              1.05        -1.89
Puerto Rico            0.95        -6.51
Iran                   0.95        28.79
Israel                 0.90        31.52
Mexico                 0.89        -3.15
Vietnam                0.88         2.73
Egypt                  0.85        10.09
Nigeria                0.78         4.83
Italy                  0.76        15.34
Lebanon                0.76        22.48
Pakistan               0.75         9.04
Turkey                 0.71        11.98
Korea                  0.70        19.54
India                  0.63         1.89
Japan                  0.46         0.63
Thailand               0.43         0.42
France                 0.36         1.68
Canada                 0.22         1.89
Germany                0.12         0.21

Notes: The immigrant groups' 33 countries of origin are ranked in
descending order of the first measure-the ethnic enclave indicator.
The ethnic enclave indicator and network indicator columns
display the average values of the "enclave effect" measure
([E.sub.jk]) and the interaction term, or "network effect"
([NETWORK.sub.jk] = [E.sub.jk] x [Q.sub.k]), respectively. The
population from the U.S. overseas territory Puerto Rico is
included, although individuals from there are technically not
immigrants. The U.S. Census data do not specify whether the
immigrants from Korea are from North Korea or South Korea (two
distinct nations), but here the immigrants from Korea are
considered to be those from both North Korea and South Korea.

Source: Author's calculations based on data from the U.S. Census
Bureau, 2000 Decennial Census, Public Use Microdata Samples,
5 percent sample.

TABLE 4
Ethnic concentration and
self-employment classification

High concentration,    High concentration,
High self-employment   Low self-employment

Cambodia               El Salvador
China                  Haiti
Columbia               Jamaica
Cuba                   Laos
Dominican Republic     Philippines
Ethiopia
Iraq
Poland

Low concentration,     Low concentration,
High self-employment   Low self-employment

Canada                 Guatemala
Egypt                  Mexico
France                 Puerto Rico
Germany                Thailand
India
Iran
Israel
Italy
Japan
Korea
Lebanon
Nigeria
Pakistan
Peru
Turkey
Vietnam

Notes: The population from the U.S. overseas territory Puerto
Rico is included, although individuals from there are technically
not immigrants. The U.S. Census data do not specify whether
the immigrants from Korea are from North Korea or South Korea
(two distinct nations), but here the immigrants from Korea are
considered to be those from both North Korea and South Korea.

Source: U.S. Census Bureau, 2000 Decennial Census, Public Use
Microdata Samples, 5 percent sample.

TABLE 5
Determinants of the self-employment decision for immigrants

                                       1             2

                                                    Add
                                                demographics

Ethnic network effect               0.132 ***    0.139 ***
                                   (0.018)      (0.018)
Ethnic enclave effect              -0.002 ***   -0.003 ***
                                   (0.001)      (0.001)
Age                                              0.007 ***
                                                (0.001)
([Age.sup.2])/ 100                              -0.005 ***
                                                (0.001)
Black                                           -0.021 ***
                                                (0.005)
Married                                          0.018 ***
                                                (0.001)
Less than high school                           -0.004 ***
                                                (0.002)
Some high school education                       0.005 ***
                                                (0.002)
College education or more                       -0.010 ***
                                                (0.002)
Speaks English well or very well

Years since migration

Years since migration 2

PUMA fixed effects                    Yes           Yes
Country of origin fixed effects       Yes           Yes
R-squared                            0.0343        0.0433
Number of observations              307,079       307,079

                                          3               4

                                     Add English
                                     proficiency        Drop
                                      and years      immigrants
                                   since migration   from Mexico

I
Ethnic network effect               0.148 ***         0.156 ***
                                   (0.018)           (0.019)
Ethnic enclave effect              -0.004 ***        -0.005 ***
                                   (0.001)           (0.001)
Age                                 0.004 ***         0.007 ***
                                   (0.001)           (0.001)
([Age.sup.2])/ 100                 -0.002 ***        -0.005 ***
                                   (0.001)           (0.001)
Black                               0.003 ***        -0.021 ***
                                   (0.000)           (0.005)
Married                            -0.006 ***         0.023 ***
                                   (0.000)           (0.002)
Less than high school              -0.023 ***         0.002
                                   (0.005)           (0.004)
Some high school education          0.018 ***         0.010 ***
                                   (0.001)           (0.003)
College education or more           0.000            -0.016 ***
                                   (0.002)           (0.002)
Speaks English well or very well    0.006 ***         0.002
                                   (0.002)           (0.002)
Years since migration               0.012 ***         0.005 ***
                                   (0.002)           (0.000
Years since migration 2             0.008 ***        -0.009 ***
                                   (0.002)           (0.001)
PUMA fixed effects                       Yes             Yes
Country of origin fixed effects          Yes             Yes
R-squared                              0.0453          0.0575
Number of observations                 307,079         183,696

                                        5

                                      Drop
                                   immigrants
                                    from Cuba

I
Ethnic network effect               0.161 ***
                                   (0.020
Ethnic enclave effect              -0.003 ***
                                   (0.001)
Age                                (0.004) ***
                                   (0.001)
([Age.sup.2])/ 100                 -0.002
                                   (0.001)
Black                              -0.023 ***
                                   (0.005)
Married                             0.017 ***
                                   (0.001)
Less than high school              -0.001
                                   (0.002)
Some high school education          0.006 ***
                                   (0.002)
College education or more          -0.011 ***
                                   (0.002)
Speaks English well or very well    0.008 ***
                                   (0.001)
Years since migration               0.003 ***
                                   (0.000)
Years since migration 2            -0.006 ***
                                   (0.000)
PUMA fixed effects                     Yes
Country of origin fixed effects        Yes
R-squared                            0.0453
Number of observations               297,443

* Significant at the 10 percent level.

*** Significant at the 1 percent level.

Notes: The sample here is made up of immigrant males aged 25-54 who
live in a metropolitan statistical area. The dependent variable is
SELFEMP, as defined in the text. The corrected robust standard
errors, clustered around the public use microdata areas (PUMAS),
appear in parentheses. PUMA fixed effects are the 1,572 dummies for
the PUMAS in the sample. Country of origin fixed effects are 33
dummies. Ethnic enclave effect and network effect are defined in
the text. The linear probability coefficient estimates are reported
in all the columns. As a robustness check, all individuals from
Mexico and Cuba are dropped from the sample in the fourth and fifth
columns, respectively.

Source: Author's calculations based on data from the U.S. Census
Bureau, 2000 Decennial Census, Public Use Microdata Samples, 5
percent sample.

TABLE 6
Interaction of ethnic networks with personal
characteristics of immigrant individuals

                                                           Standard
                                                           deviation

1 Networks                                   0.0304        (0.251)
  Networks x years since migration           0.0062 ***    (0.001)

2 Networks                                   0.1053 **     (0.0314)
  Networks x English language proficiency    0.0494        (0.0306)

3 Networks                                   0.077 ***     (0.017)
  Networks x high school or less             0.11248 ***   (0.02957)

4 Networks                                   0.2174 *      (0.0253)
  Networks x college degree                 -0.11248 ***   (0.02957)

** Significant at the 5 percent level.

*** Significant at the 1 percent level.

Notes: The sample here is made up of immigrant males aged 25-54 who
live in a metropolitan statistical area. The dependent variable in
each of the four regressions is SELFEMP, as defined in the text. In
addition to the variables reported here, the regressions control for
the group fixed effects and public use microdata area fixed effects,
age, martial status, race, education, English language proficiency,
and years since migration. The robust standard errors appear in
parentheses. The ethnic network indicator is defined in the text.
The linear probability coefficient estimates are reported.

Source: Author's calculations based on data from the U.S. Census
Bureau, 2000 Decennial Census, Public Use Microdata Samples, 5
percent sample.