New Americans spearhead a startup revolution: Immigrants launch 25% of U.S. new businesses, study reveals

NEW YORK CITY - Immigrants contribute disproportionately to entrepreneurship in many countries, accounting for a quarter of new employer businesses in the U.S., according to a new study by the National Bureau of Economic Research.

The study "Immigrant Entrepreneurship: New Estimates and a Research Agenda" reviewed recent research on the measurement of immigrant entrepreneurship, the traits of immigrant founders, their economic impact, and policy levers.

The study found that immigrants account for about a quarter of new employer businesses in the U.S. Because of this, researchers argue that immigrants are over-represented as founders of innovative firms in the high-tech industry, for instance.

In 2022, the four most valuable private, venture-backed U.S. companies— SpaceX, Stripe, Instacart and Databricks— had immigrant founders, along with three of the ten most valuable public companies globally, like Alphabet, Nvidia and Tesla.

Similarly, the study explains that immigrants in the United States are more likely to hold a granted patent (1.1%), commercialize a patent (0.7%), publish a scientific paper (3.2%), and start a business (0.18%) compared to natives.

Education and personal histories with entrepreneurship are some of the reasons the Bureau attributes to these figures.

Educational attainment and field of study fully accounts for holding a granted patent, commercializing it, and publishing a scientific paper. On the other hand, personal career histories and selection of who migrates explain some of the immigrant propensity towards entrepreneurship.

The study shows that immigrants entering entrepreneurship before migration in their home country are disproportionately likely to enter entrepreneurship in their new host country.

This project sums to a growing amount of recent literature showing an increased rate of entrepreneurship among immigrants across different sectors and industries.

For example, a March report by The Wall Street Journal showed that Latin American immigrants are starting businesses at more than twice the rate of the U.S. population.

According to that report, the jump in Latino entrepreneurship levels has driven up the overall share of new businesses owned by immigrants, who accounted for 36% of launches last year compared with 25% in 2019. By comparison, new business creation by white and native-born Americans has slowed in the past two years, following a broad surge early in the pandemic.

For Latino immigrants, particularly undocumented ones, entrepreneurship is an outstanding option, since it doesn't require work authorization or a Social Security number. For others, it's a matter of necessity, as limited proficiency in English and lack of American credentials can make it increasingly difficult to find a job.