30 Mar 2021Working Paper Summaries

Whose Job Is It Anyway? Co-Ethnic Hiring in New US Ventures

by Sari Pekkala Kerr and William R. Kerr

The impact of immigration has been particularly sharp in entrepreneurship, yet there is remarkably little evidence about how immigration in the workplace connects to the creation and scaling of new firms. The economic consequences of greater workplace and entrepreneurial diversity deserve closer attention.

Author Abstract

We explore co-ethnic hiring among new ventures using US administrative data. Co-ethnic hiring is ubiquitous among immigrant groups, averaging about 22.5 percent and ranging from less than 2 percent to greater than 40 percent. Co-ethnic hiring grows with the size of the local ethnic workforce, greater linguistic distance to English, lower cultural/genetic similarity to US natives, and in harsher policy environments for immigrants. Co-ethnic hiring is remarkably persistent for ventures and for individuals. Co-ethnic hiring is associated with greater venture survival and growth when thick local ethnic employment surrounds the business. Our results are consistent with a blend of hiring due to information advantages within ethnic groups with some taste-based hiring.