Social Networks, Ethnicity, and Entrepreneurship
We study the relationship between ethnicity, occupational choice, and entrepreneurship. Immigrant groups in the United States cluster in specific business sectors. For example, Koreans are 34 times more concentrated in self-employment for dry cleaning than other immigrant groups, and Gujarati-speaking Indians are 84 times more concentrated in managing motels. We quantify that smaller and more socially isolated ethnic groups display higher rates of entrepreneurial concentration. This is consistent with a model of social interactions where nonwork relationships facilitate the acquisition of sector-specific skills and result in occupational stratification along ethnic lines via concentrated entrepreneurship.
William Kerr is a Professor at Harvard Business School and a Research Associate at the National Bureau of Economic Research. Martin Mandorff is an Economist at the Swedish Competition Authority. We thank Emek Basker, Gary Becker, Michel Beine, Ola Bengtsson, Gustaf Bruze, Dennis Carlton, Barry Chiswick, Rob Fairlie, Matthew Gentzkow, John Haltiwanger, Emil Iantchev, Svante Janson, Mini Kaur, Steven Lalley, Anne Le Brun, Ben Mathew, Trang Nguyen, Andriy Protsyk, Yona Rubinstein, Jesse Shapiro, Rachel Soloveichik, Chad Syverson, Catherine Thomas, Robert Topel, Nick Wormald, and seminar participants for very valuable comments. We thank Meir Brooks, Rahul Gupta, and Kendall Smith for excellent research support. The theory section of this paper draws heavily from Mandorff's Ph.D. Dissertation at the University of Chicago. Financial support from the Marcus Wallenberg Foundation, the Jan Wallander and Tom Hedelius Foundation, the Esther and T.W. Schultz Dissertation Fellowship, the Markovitz Dissertation Fellowship, the Kauffman Foundation, and Harvard Business School is gratefully acknowledged. The data used in this article are available online: https://doi.org/10.7910/DVN/ZUUHAM, Harvard Dataverse, V1, UNF:6:Kr7aMQGf04wkidnHWncA3A== [fileUNF]. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
William R. Kerr & Martin Mandorff, 2023. "Social Networks, Ethnicity, and Entrepreneurship," Journal of Human Resources, vol 58(1), pages 183-220.