Too Cold to Venture There? January Temperature and Immigrant Self-Employment Across the United States

Abstract

Immigrants in the United States have higher self-employment rates than native-born Americans. However, immigrant self-employment rates vary considerably across areas of the country. The authors examine the percentage of immigrant workers in local areas who are self-employed (i.e., the self-employment rate for the foreign born). Areas with colder winter temperatures have especially low self-employment rates among their immigrant populations compared to warmer areas. The relationship between winter temperature and immigrant self-employment persists after controlling for numerous individual and local area characteristics. The relationship holds for numerous subsamples of immigrants but is strongest for immigrants arriving to the United States as adults. Child immigrants and native-born Americans exhibit a weaker relationship, possibly because of previous exposure and attachment to particular locations chosen by their parents that constrain the migration responses of potential entrepreneurs. Entrepreneurial immigrants arriving to the country as adults appear especially footloose and particularly responsive to January temperatures in their location decisions.