The Effect of Immigration on Entrepreneurship

This research focuses on the impact of immigration on entrepreneurship. I find clear evidence that immigration has a significant impact on entrepreneurship. The paper makes three important contributions to the research of both immigration and entrepreneurship. First, it proposes unique empirical evidence using a cross-section analysis in which the country's level of immigrants has a significantly positive affect on its level of entrepreneurship. Second, it adds to the theoretical understanding of the mechanisms and environments that characterize positive immigration effects on entrepreneurship. I suggest that country-specific characteristics - in particular urban, open, competitive and culturally diversified (including open minded for ethnic and gender diversity) - influence significantly the positive effect of immigrants on the country's level of entrepreneurship. Furthermore, these positive effects are magnified as the flow of immigrants grows. Third, it uses for the first time in the literature a cross-section data set of 176 countries of immigrants and entrepreneurial activity.