Countering View of Immigrants as Entrepreneurs.

THE popular idea that immigrants breathe fresh life into local economies is being challenged by a new study, which claims that U.S.-born residents nationwide tend to be no less entrepreneurial than immigrants.

The contrast is especially striking in Los Angeles, where natives are twice as likely to be self-employed as immigrants.

The study, published by the Center for Immigration Studies, shows that in 1997, 11.8 percent of people aged 25 and over who were born in the United States were self-employed, compared with 11.3 percent of immigrants.

Those numbers undermine the oft-repeated claim that immigrants are more entrepreneurial than natives, said Steve Camarota, director of research at the CIS and author of the study.

"That does not mean that there are not a large number of immigrant entrepreneurs," he said. "What it shows is that immigrants do not have a positive impact on the overall level of entrepreneurship in the U.S. It shows that the importance of immigrants for revitalizing the economy has been grossly overstated by the media."

If the difference in self-employment levels between natives and immigrants nationwide is marginal, in the city of Los Angeles it is striking.

The level of self-employment among immigrants in the city of L.A. is, at 11.8 percent, comparable to the national average. But the study shows that 21.6 percent of native-born Angelenos are their own bosses.

"The growth of self-employment among natives is the phenomenon that needs to be explained," said Ivan Light, a professor of sociology at UCLA. "From previous data, we used to infer that higher rates of immigration would lead to higher rates of self-employment. If that's no longer the case, the increase of self-employment among natives is a big part of the explanation."

While the study does not provide historical data for the city of Los Angeles, it shows that the level of self-employment among natives nationwide has been inching up since the 1960s, when it was 9.6 percent.

There are various explanations cited for the increased level of self-employment nationwide, as well as the very high level in L.A.

"It reflects the growth of the information and media economy, which has penetrated more deeply in Los Angeles than almost anywhere else and where you find a large number of self-employed professionals," said William Gartner, professor of entrepreneurship at the USC Marshall School of Business. "At the same time, you will find relatively few immigrants in these industries."

Linda Griego, former chief executive of the Los Angeles Development Bank, agrees that the entertainment industry is one of the most important factors creating a different degree of self-employment in L.A.'s native population than in the nation as a whole.

"A few years ago, we did a study that looked at the relationship between self-employment and the uninsured," said Griego. "We found that the largest number of self-employed were in Hollywood. There are many, many self-employed writers and producers, and their numbers skew everything else."

As of 1997, according to the U.S. Census Bureau, only 5.3 percent of the more than 1.5 million writers, artists, entertainers and athletes in the U.S. were of Hispanic origin -- and Latinos make up the largest single group of immigrants in L.A.

Even as the level of native self-employment grows, the level of self-employment among immigrants nationwide has been declining since the 1960s. From 13.8 percent in 1960, it fell to 11.3 percent in 1997.

That drop, Camarota argues, is due to a lower level of education among more recent immigrants, a shift in immigration from European countries to Latin America and Asia, and a general increase in the number of immigrants.

"Compared to the '60s and '70s, the composition of immigrants has changed," agreed Georges Vernez, director of the Center for Immigration Policy at the Rand Institute. "Mexican immigration has dwarfed immigration from other countries in California. These immigrants, in most cases, have a low level of education and no capital, which means that they will have a low level of self-employment as well."

In 1996. the latest year for which data is available, one out of four legally admitted new immigrants to Los Angeles County came from Mexico, according to the California Department of Finance. That ratio may be even higher for the city of Los Angeles.

Meanwhile, the CIS study shows that Mexican immigrants nationwide have the lowest education level of all major immigrant groups, with 64 percent of those 25 and older having less than a high school education. Mexican immigrants also are among the least likely to be self-employed, at 6.3 percent.

By contrast, immigrants from Korea have one of the highest levels of education, with only 3.8 percent being below the high school level. At 32.9 percent, Korean Americans also have the highest level of self-employment among immigrant groups.

"Koreans do well not just because they come to the U.S. highly educated, they also tend to have more wealth to start with, and they have more social capital," said Gartner. "They have connections and networks that enable them to be more successful in starting their own businesses."

The low educational level of large numbers of new immigrants means that rather than starting their own businesses, many of them find work in low-skilled, low-wage occupations. This has created benefits for, among others, the apparel industry in Los Angeles, which relies heavily on inexpensive labor.

"There are both economic costs and benefits to the changing composition of immigrants," said Vernez. "The supply of low-wage workers certainly has helped the economic boom in California, but it has also increased the need for public services for these workers and their families. It will depend on one's value system whether or not one sees the net result as positive or negative."

                              Self-Employment
                Percent of residents who are entrepreneurs.
Area                Natives Immigrants
Boston Metro          9.6%      6.5%
Chicago Metro         9.4      10.1
Dallas Metro         10.2       6.4
Houston Metro        10.9      11.1
Los Angeles Metro    14.2      12.4
Los Angeles City     21.6      11.8
Miami Metro          13.5      12.7
New York Metro       11.2       9.5
New York City         9.8       9.3
San Francisco Metro  13.9      13.7
San Francisco City   14.7       8.8
Source: Center for Immigration Studies