The role of culture on self-employment

There is an extensive literature examining the determinants of self-employment. These studies have mainly failed to account for the differences in entrepreneurial spirit across countries. This paper explores the role of culture in self-employment by exploiting variation in historical self-employment rates by country of origin of second-generation immigrants. Since second-generation immigrants are born in the U.S., all of them live under American laws and institutions. Thus, we interpret differences in self-employment rates by country of origin as evidence of the effect of culture. Using this epidemiological approach, we find that culture has quantitatively significant effects the self-employment decision.