The Business Ownership Patterns of Undocumented Immigrants in the United States: An Exploratory Study

Abstract

When debating the effect of undocumented immigrants on the economy, scholars often presume that undocumented immigrants are wage laborers rather than business owners. This study imputes the legal status of Mexican and Central American immigrants (MCAs) in the Survey of Income and Program Participation (SIPP) between 1996 and 2008 to evaluate how legal status affects business ownership patterns. From 1996 to 2008, the SIPP asked a series of questions about business ownership and migration history that make it uniquely suited to an investigation of undocumented MCA business owners. Instrumental variables regressions reveal that undocumented immigrants had a lower likelihood of owning a business than documented immigrants, but undocumented and documented business owners derived similar incomes from their businesses. A lack of legal status may hold back potential entrepreneurs. MCA business owners of both legal statuses clustered into similar low-paying, low-growth industries, however, so regardless of legal status, there are likely limits to how much business ownership can promote economic mobility among MCAs. All told, scholars should do more to acknowledge the existence of undocumented immigrant business owners, measure their impact on the economy, and examine their influence on immigrant incorporation patterns.