Is Entrepreneurship Dead?: The Truth About Startups in America by Scott A. Shane
Author:Scott A. Shane [Shane, Scott A.]
Language: eng
Format: epub
Tags: Business & Economics, Economic Conditions, Entrepreneurship
ISBN: 9780300212112
Google: eMNTDwAAQBAJ
Amazon: B07C12197Q
Publisher: Yale University Press
Published: 2018-04-15T03:00:00+00:00
NINE
It’s Not a Lack of Immigration
Another explanation for the decline in employer firm formation is a lack of immigration. Several people associated with the Ewing Marion Kauffman Foundation, a research and advocacy organization in Kansas City, have argued that the solution to the post-1970s decline in employer business startups is to increase immigration.
Before we start printing visas, however, we should probably try to confirm that lack of immigration is actually causing—or at least contributing to—the decline. A closer look does not provide much support for this idea. There is no evidence that too little immigration is responsible for the decline in employer firm formation and the rise in non-employer business generation. There is scant support for the idea that immigrants are more entrepreneurial than the native born or that making it easier for them to get into this country will boost entrepreneurship rates.
There might be many good reasons for stapling green cards to STEM degrees or otherwise boosting immigration. I do not take a position on that issue in this book. But there is no reason to believe that trends in entrepreneurship rates in America over the past several decades have been driven by levels of immigration or that more immigration will generate more entrepreneurship.
The Basic Argument
Before I get into the reasons why the immigration argument is flawed, I should outline what it is. This school of thought points to three reasons why we need more immigration if we want to reverse the downward trend in employer business creation. First, immigrants are more likely than the native born to start businesses. Dane Stangler, the vice president of research at the Kauffman Foundation, says that immigrants have rates of entrepreneurship that are up to twice as high as the general population’s because they are less risk averse.1 Robert Litan and his coauthor Ian Hathaway, both at the Brookings Institution, say, “We know that immigrants have a great propensity to launch new businesses—high-tech businesses in particular. . . . So we know [immigration is] something that will push the entrepreneurship rate up higher.”2
Second, by making it difficult for immigrants to enter and stay in the United States, the government has reduced the pool of people who will start businesses. This country’s antipathy toward immigration, goes the argument, has caused would-be immigrant entrepreneurs to choose other countries instead. A good example is Chile. Since 2010, Chile has given foreign entrepreneurs a $40,000 stipend, free office space, and other support if they agree to visit the country for half a year and network with locals.3 The lack of programs like Start-Up Chile puts us at a competitive disadvantage in attracting immigrant entrepreneurs and lowers our level of entrepreneurial activity.4
Third, more immigration is necessary to increase business startups because America cannot produce enough talent to meet employers’ needs. Startups can’t find the local talent that they need or afford to provide training to employees who lack the necessary skills, explains John R. Dearie of the Financial Services Forum. Moreover, “the scarcity of skilled talent has
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