FRONT PAGES: January Temperatures And Immigrant Entrepreneurship

dWeb.News Article from Daniel Webster dWeb.News

Newswise – Ames, IA – The new year’s slide can often be measured in the disappearance or resurgence of gym memberships, the loss of string lights on roofs and, perhaps most importantly, the colder winter weather. Iowa State University researchers discovered a surprising link between temperature drops and immigrant entrepreneurs. January is the coldest month in the United States.

The working papers of the researchers reveal that the proportion of immigrants who are self-employed to those who are paid is higher in areas with warmer January temperatures (i.e. the South) than in regions with colder January temperatures (i.e. the Midwest). Specifically, the researchers found an additional 10 degrees Fahrenheit of mean January temperature is associated with a 1. 46% increase in the rate of immigrant entrepreneurs.

“That may not sound like a lot, but if you go from a 10-degree mean temperature in a state like Minnesota to a 60-degree mean temperature in Florida, the data shows more than double the percent of immigrants in the area who have their own business,” said John Winters, a professor of economics at ISU.

The percentage of immigrant workers who are self-employed is 6.5% in Minnesota compared to 14.5% in Florida.

Winters, and Ph.D. Candidate Jun Yeong Lee examined data over the 2012-2019 period from the American Community Service, a program under the U.S. Census Bureau.

Before the study , Winters stated that he knew that the U.S. had seen a steady increase in population in the South and West and that immigrants were more concentrated in these areas.

“However, the idea that entrepreneurs make up such a large percentage of immigrants was quite surprising. Winters said, “I didn’t anticipate that.”

State map of immigrant self-employment rate. Larger image. Courtesy of Jun Yeong Lee/Iowa State University

The researchers believe a possible explanation for the pattern is that some immigrants may be willing to put up with cold January temperatures for temporary educational opportunities or paid positions. However, starting a business can be a costly investment. It can take many years to recover initial costs and build a reputation.

Winters stated that entrepreneurs might not want to live in a harsh climate.

” Many immigrants have never lived in cold areas and don’t know how they will adapt. Winters said that if you are unsure about your preferences and abilities to adapt, it may be difficult to start a business in a new environment. To test for other explanations, the researchers examined a variety of factors including labor force participation and linguistic enclaves. They also looked at retail infrastructure, wealth, education levels, and where immigrants came from.

Labor force

The researchers found places with high labor force participation rates tend to have fewer immigrant entrepreneurs.

” If the local labor market becomes very weak, people may leave the workforce and turn to self-employment. Winters explained that if you are an immigrant and have difficulty finding work, you might start a small business. “Areas that have stronger labor markets have higher labor force participation and lower immigrant self employment rates But labor force participation wasn’t enough to explain the stark spatial pattern of low immigrant entrepreneurship within the Midwest.

Linguistic enclaves

The researchers also found a higher share of immigrants in an area who speak the same language leads to higher self-employment among those immigrants.

Winters said people living in these linguistic areas may be able to fill in gaps in certain services. A community with a large number of Central American Spanish speakers has a better chance of opening a grocery shop that sells products from Guatemala, Honduras, and El Salvador than one dominated by English speakers.

Concentrations of immigrant populations with linguistic enclaves in the South and in large metro areas on the East and West coasts could be creating a positive feedback loop of entrepreneurship.

Other factors

The researchers investigated whether immigrant entrepreneurs from warmer origin countries were more likely to settle in warmer parts of the U.S. compared to immigrants from colder origin countries but found little evidence. Canadian immigrants who set up their own businesses preferred Florida and Texas to North Dakota.

The researchers did not find any differences in wealth or education to explain immigrant self-employment variations across regions. The researchers believe their analysis of January temperatures and immigrant entrepreneurs is reliable, but Winters stated that it’s difficult to find an explanation.

“We’re adding pieces to the puzzle, but we don’t have the full image yet.”

Changing the pattern

The researchers also looked for a link between January temperatures and rates of entrepreneurship for people born in the U.S. Winters said the data analysis showed no relationship, meaning a businessowner in northern Minnesota may like the idea of living in warm, sunny San Diego. They may stay in the state they were born because it’s home to their family or friends, or because they have had certain experiences growing up like ice fishing and Nordic skiing.

Winters stated that while community leaders can’t change the weather, they can foster the same attachment to the Midwest as immigrants who have come here to study or work in paid jobs. Along with ensuring school districts and city governments provide information in multiple languages, communities could invest in indoor recreational amenities and programs that make cold seasons more attractive (community-sponsored, family-friendly snowshoe events, for example).

State and regional agencies interested in economic development could expand and tailor accelerators training and support for immigrants who are interested starting their own businesses.

” It’s important to realize that cold regions, such as the Midwest, face unique challenges in attracting outside talent. Winters stated that if people can see these areas as their home, they will be more inclined to stay there and start a business.

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