Why Immigrants self employ and cluster

This research paper asks in effect the question: why to immigrants start their own businesses and form clusters within a sector (Korean grocery stores, Gujaratis from India running half the motels).

The reason, the paper says, is that self-employed immigrants have more income than do immigrants employed by firms, and clustering adds even more income. Not rocket science, but good that it has been documented.

The world has experienced a massive increase in migration in the past fifty years. A key reason why is that the risks of migration have gone down and on balance the rewards have gone up. I’ve covered this with respect to the cost of migration, which Trump wanting to sharply increase, and with respect to earning potential. Once here, self employment in a clustered sector trumps Trump.

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