STUDY: 'Koreans are 34 times more likely to than other immigrants to operate dry cleaners'

It’s generally a faux pas to openly associate an ethnic or racial group with a particular job.

But according to economists William Kerr of Harvard Business School and Martin Mandroff of the Swedish Competition Authority, there may actually be some merit to this observation.

“Immigrant groups in the United States cluster in specific business sectors,” the reasearchers wrote. “For example, Koreans are 34 times more likely than other immigrants to operate dry cleaners, and Gujarati-speaking Indians are 108 times more likely to manage motels.”

Mandroff and Kerr said they were able to develop a framework as to why this occurs.

“By distinguishing between market interactions and social interactions, we have developed a theory where social relationships reduce the cost of acquiring sector-specific skills for entrepreneurship,” wrote the researchers. “As a result, occupational choice reinforces initial group differences, and different ethnic groups cluster in different industries.”

While that may seem like a thicket of jargon, it comes down to three things: social interactions, market interactions and skill acquisition.

  • Social interactions are what they sound like: talking to and engaging with another person or group.
  • Market interactions are interactions with the economy in a broad sense, such as applying for a corporate job or the education system.
  • Finally, skill acquisition is learning a trade or job.

People determine what industry they enter based on their interactions, either learning a trade through market interactions or through social interactions.

Mandroff and Kerr say that since market interactions can be more difficult for members of an ethnic enclave, they will be more inclined to lean on social interactions for skill acquisition and finding employment.

“Minorities are put at a disadvantage in industries where market interaction is important, and are consequently driven out of these sectors; a group speaking only a minority language would for example have a hard time competing in an industry such as academia,” write the economists.

To back up the claim, Mandroff and Kerr analysed data of 25 minority immigrant groups from the 2000 US census.

They found that for each of the 25 groups, there was one significant industry in which they clustered.

Additionally, the industries where groups were significantly overrepresented typically matched up with the industry with the highest rates of self-employment, or entrepreneurship, for that group.

“In 17 of 25 cases shown, the industry where the ethnic group displays the highest concentration for self-employment is the same as the industry where the ethnic group shows the highest concentration for total employment,” wrote Mandroff and Kerr.

Whether or not this clustering and entrepenuership is ultimately positive is a larger question, said Mandroff and Kerr.

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