Entrepreneurship and Survival Dynamics: A Comparison of U.S.-Born and Foreign-Born Households

Konstantinos Tatsiramos, Institute for the Study of Labor (IZA)
Dimitris Georgarakos, Johann Wolfgang Goethe-Universität Frankfurt

The paper analyses the survival dynamics of business ownership of first generation (foreign-born) and second or higher generation (U.S.-born) immigrants employing data from the Survey of Income and Program Participation (SIPP). While previous research has examined the determinants of entering into entrepreneurship for different racial and ethnic groups, very little is known on the survival probabilities and the transitions out of entrepreneurship and how these differ across generations. Using duration analysis which addresses the dynamic selection that takes place through duration dependence and unobserved heterogeneity, the findings suggest that first generation immigrants exhibit a lower survival probability in entrepreneurship, which is mainly due to higher exit rates for Mexicans and other Hispanics. However, these differences do not carry on to the second or higher generations.