Informality and Latino‐Owned Businesses: A National Portrait of Unregistered Latino‐Owned Businesses

Abstract

Objective This study provides the first nationally representative portrait of unregistered (informal) Latino‐owned businesses (LOBs) in the United States. Methods We employ data from the 2018 Stanford Latino Entrepreneurship Initiative Survey of 4,024 U.S. LOBs. We estimate the determinants of unregistered LOBs through a set of independent variables derived from entrepreneur demographics/firm characteristics utilizing a binomial logistic regression to predict the odds of group membership between (un)registered LOBs. Results Approximately one‐third of LOBs across the United States operate as unregistered enterprises. We find that LOB firm registration is associated with higher levels of education of the entrepreneur and larger size of the LOB. We uncover further links between entrepreneur acculturation and gender, and firm product offering and clientele ethnicity, with firm registration. Conclusion For the first time, we are able to establish a quantitative baseline for informality and firm registration among LOBs using a nationally representative sample.

From immigrants to local entrepreneurs: understanding the effects of migration on entrepreneurship in a highly informal country

“…Thus, we confirm that informality plays an essential role in strengthening the spillover effects that immigration has on entrepreneurship driven by necessity even more in developing regions, where self-employment is an escape route from unemployment. This supports what Pisani (2018), Pisani et al (2017) and Pisani and Morales (2020) state.…”

“…has on the different types of entrepreneurial activities. Pisani and Morales (2020) state that informality plays an important role in the creation of Latino-owned businesses (LOBs) in the United States. Consistent with evidence in developed countries, Kontos (2003) presents results for Germany, showing that immigrants are excluded from political and social participation, and that they do not have the possibility to access economic resources that allow them to carry out entrepreneurial activities, hence pushing them into self-employment in the informal labor market.…”

“…Informality in developing countries is strongly related to institutional weakness (Chong and Gradstein, 2007), and is triggered by certain rigidities in the labor market in these countries (Canclini, 2019). Consequently, this might strengthen the effect of immigration on entrepreneurial activities (Pisani, 2018;Pisani et al, 2017;Pisani and Morales, 2020). In the case of Colombia, for example, Garc ıa (2017) and J€ utting and De Laiglesia (2009) have found firms hire workers without a formal contract, which is harmful for the labor market and economy at large due to unfair salaries and tax avoidance.…”

New Age Informality: Hispanics and the Sharing Economy

“…For example, it is estimated that the informal economy comprises more than sixteen percent of the Los Angeles workforce (Klowden and Wong 2005) to upwards of twenty-five percent of the entire economy of Hispanic South Texas (Richardson and Pisani 2012). Additionally, a recent national study estimates that perhaps as many as one-third of Latino-owned businesses are unregistered enterprises (Pisani and Morales 2020). The sharing economy provides one new pathway into the informal economy.…”

On Farmers Markets as Wicked Opportunities

“…We know that the practice of conventional or industrial agricultural practices eliminates the chance of achieving global climate change objectives [16]. But, agriculture has the potential to help achieve those objectives by mitigating greenhouse gas emissions through carbon sequestration [17].…”