Immigrant entrepreneurs in bankruptcy

American Bankruptcy Law Journal

Volumn 82, Issue 4, 2008, Pages 693-714

  Efrat, Rafael ^a  

^a CALIFORNIA STATE UNIVERSITY   (United States)

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EID: 60949099960     PISSN: 00279048     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (130)

1. See WILLIAM J. DENNIS, JR., NFIB RESEARCH FDN., THE PUBLIC REVIEWS SMALL BUSINESS 6 (2004), available at www.nfib.com/object/publicReview.html; ROBERT W. FAIRLIE, EWING MARION KAUFFMAN FDN. KAUFFMAN INDEX OF ENTREPRENEURIAL ACTIVITY 1996-2004 13 (2005), available at http://www.kauffman.org/uploadedFiles/KIEA-2004- R0506.pdf (estimating that 6.3% of the adult population in the United States is self-employed, including those who own incorporated or unincorporated businesses and those who are employers and non-employers).
2. See OFFICE OF ADVOCACY, SMALL BUSINESS ADMIN., ANNUAL REP. ON SMALL BUS. AND COMPETITION 17 (2001), available at http://www.sba.gov/advo/research/stateofsb99-00.pdf ("Small businesses represent 99 percent of businesses.").
3. See generally DAVID L. BIRCH, JOB CREATION IN AMERICA: HOW OUR SMALLEST COMPANIES PUT THE MOST PEOPLE TO WORK (1987);
4. Bruce A. Kirchhoff, Entrepreneurship and Dynamic Capitalism: The Economics of Business Firm Formation and Growth (1994).
5. See Fairlie, supra note 1, at 2 (finding that between 1996 and 2004, "an average of 0.36 percent of the adult population created a new business each month. This represents approximately 550,000 new businesses per month over the period.").
6. See ANNUAL REP. ON SMALL BUS., supra note 2, at 17.
7. See George J. Borjas, The Self Employment Experience of Immigrants, 21 J. HUM. RESOURCES 485, 487 (1986) ("These statistics indicate that self-employed workers have higher annual incomes than salaries workers ℓ").
8. See George W. Haynes & Charles Ou, A Profile of Owners and Investors of Privately Held Businesses in the United States, 1989-1998 8 (April 25-26, 2002) (unpublished manuscript), available at http://www.sba.gov/ advo/stats/wkp02co.pdf (finding that in 1998 households of business owners had higher income and higher net worth compared to non-business owner households).
9. See ANNUAL REP. ON SMALL BUS., supra note 2, at 17 ("Small business continued to be an important means by which women, minorities, and immigrants entered the American economic mainstream and managed to increase their share in the economy."); OFFICE OF ECON. RESEARCH, SMALL BUSINESS ADMIN., THE NEW AMERICAN EVOLUTION: THE ROLE AND IMPACT OF SMALL FIRMS 4 (1998), available at http://www.sba.gov/stats/evol-pap.html ("Small businesses enables millions, including women, minorities, and immigrants, to access the American Dream.").
10. See ROBERT W. FAIRLIE, SELF-EMPLOYED BUSINESS OWNERSHIP RATES IN THE UNITED STATES: 1979-2003 6 (2004), available at http://www.sba.gov/ advo/research/rs243tot.pdf (reporting that in 2003, 147% of business owners in the United States were foreign-born); OFFICE OF ADVOCACY, SMALL BUS. ADMIN., CHARACTERISTICS OF SMALL BUSINESS EMPLOYEES AND OWNERS 1997 15 (1998), available at http://www.sbaonline.sba.gov/advo/stats/ch-em97-pdf (indicating that in 1992, 9-4% of business owners in the United States were foreign-born).
11. See IVAN LIGHT & CAROLYN ROSENSTEIN, RACE, ETHNICITY, AND ENTREPRENEURSHIP IN URBAN AMERICA 183 (1995) (finding that in the 272 metropolitan areas of the United States in 1980, the selfemployment rate among all foreign-born was 9.1% compared to 7.2% of the native-born entrepreneurs); Borjas, supra note 6, at 487 (finding that immigrants in several racial groups are more likely to be selfemployed than the native-born).
12. See LIGHT & ROSENSTEIN, supra note 10, at 181 ("[I]n every decennial census between 1880 and 1980, the foreign born evidenced persistently higher rates of self employment than did native born."); Ivan Light, Immigrant and Ethnic Enterprise in North America, 7 ETHNIC AND RACIAL STUD. 195, 198 (1984) ("In actual fact, the foreign born have been overrepresented in American small business since 1880 and probably earlier.").
13. See IVAN LIGHT & EDNA BONACICH, IMMIGRANT ENTREPRENEURS: KOREANS IN LOS ANGELES 1965-1982 (1988) (suggesting that renewed immigration between 1972 and 1984 contributed to the resurgence of the self-employment rate in the United States in those years).
14. See LIGHT & ROSENSTEIN, supra note 10, at 183 ("[S]ome immigrant and ethnic minorities displayed higher rates of self employment than others"); Eran Razin, Entrepreneurship among Foreign Immigrants in the Los Angeles and San Francisco Metropolitan Regions, 9 URBAN GEOGRAPHY 283, 288 (1988) ("Great variations in the rates of self-employment existed among various ethnic groups. While certain Middle Easterners and Southeast Asians ℓ showed high rates of self employment, Latin Americans and Filipinos had extremely low rates.").
15. 14 See JAMES P. ALLEN & EUGENE TURNER, THE ETHNIC QUILT: POPULATION DIVERSITY IN SOUTHERN CALIFORNIA 207 (1997) ("Ethnic differences in self-employment are sometimes the result of cultural backgrounds which predispose some groups more than others to entrepreneurship.").
16. See JOEL KOTKIN & ERIKA OZUNA, ECONOMIC ALLIANCE OF THE SAN FERNANDO VALLEY, THE CHANGING FACE OF THE SAN FERNANDO VALLEY 18 (2002), available at http://www.valleyofthestars. net/public-html/Library/ Changing%20Face%20of%20the%20SFV%202002/The%20Changing%20Face %20of%20the%20San%20Fernando%20Valley%20Rev%203.pdf ("Several of the fastest growing ethnic groups in the Valley - notably Russian Jews, Koreans, Iranians and Armenians -boast among the highest rates of entrepreneurship in Southern California."); Pyong Gap Min & Mehdi Bozorgmehr, Immigrant Entrepreneurship and Business Patterns: A Comparison of Koreans and Iranians in Los Angeles, 34 INT'L MIGRATION REV. 707, 722-23 (2000) (finding that the self-employment rates of foreign-born Koreans, Iranians and Chinese are significantly higher than the self-employment rate of native-born whites); Eran Razin, Immigrant Entrepreneurs and the Urban Milieu: Evidence from the U.S., Canada and Israel Table 3 (Vancouver Centre of Excellence, Working Paper No. 99-01, 1999), available at http://www.riim.metropolis.net/Virtual%20Library/1999/wp9901.pdf (finding that the self-employment rates of various self-employed immigrant groups in Los Angeles exceed 23%).
17. See ALLEN & TURNER, supra note 14, at 207.
18. See id. at 204 ("Over the past thirty years the self-employment in Los Angeles and Orange Counties has more than tripled. This trend is linked to entrepreneurship among immigrants.").
19. See Roper Center, Los Angeles Times Poll #427: Los Angeles County Small Businesses 50 (1999) (reporting that 44% of the self-employed respondents surveyed said they were born outside the United States).
20. See Gustavo Mesch & Daniel Czamanski, Occupational Closure and Immigrant Entrepreneurship: Russian Jews in Israel, 26 J. SOCIO-ECON. 597 (1997);
21. OFFICE OF ADVOCACY, SMALL BUS. ADMIN., MINORITIES IN BUSINESS 2001 4 (Nov. 2001), available at http://www.sba.gov/advo/stats/min01.pdf ("For many immigrants, the 'American Dream' has included the ownership of a small business that will serve as a gateway to America's economic mainstream.").
22. See Robert W. Fairlie & Bruce D. Meyer, Ethnic and Racial Self-Employment Differences and Possible Explanations 31 J. HUMAN RESOURCES 757, 775 (1996) ("[T]he [disadvantage] theory argues that disadvantages such as a difficulty speaking English, poverty, unemployment, and discrimination cause certain groups to favor self-employment."); Ivan Light, Disadvantaged Minorities in Self Employment, 20 INT'L J. COMPARATIVE SOC. 31 (1979) (arguing that obstacles in the labor market, including age, low education, and lack of language proficiency, prompt many immigrants to become entrepreneurs).
23. See Steven J. Gold, Refugees in Small Business: The Case of Soviet Jews and Vietnamese, 11 ETHNIC & RACIAL STUD. 411 (1988) (asserting that immigrants find their occupations do not land them good jobs in their new country because of distinctive training and licensing requirements); Kwang Kim et al., Intragroup Differences in Business Participation: Three Asian Immigrant Groups, 23 INT'L MIGRATION REV. 73 (1989)(arguing that American employers often do not recognise the work experience and education that immigrants have acquired in their home countries); Janet W. Salaff, et al., Ethnic Entrepreneurship, Social Networks, and the Enclave, in APPROACHING TRANSNATIONALISM: TRANSNATIONAL SOCIETIES, MULTICULTURAL CONTACTS, AND IMAGININGS HOME 61, 61 (Brenda Yeoh et al. eds., 2002) ("Canadian employers do not recognise the credentials of immigrant professional and technical workers.").
24. See Fairlie & Meyer, supra note 20, at 775;
25. Light, supra note 11, at 198 (concluding that the greater the disadvantage immigrants face in the labor market, the greater the incentive they have to become selfemployed). But see Alejandro Portes & Min Zhou, Self Employment and the Earnings of Immigrants, 61 AM. SOC. REV. 219, 219 (1996) (suggesting that rather than being pushed into self-employment, immigrants choose to become self-employed as a way of pursuing economic progress).
26. See STEVEN J. GOLD, REFUGEE COMMUNITIES: A COMPARATIVE FIELD STUDY 171 (1992);
27. Fairlie & Meyer, supra note 20, at 775 (arguing that a reason for overrepresentation of certain immigrants among entrepreneurs is the embedded tradition of buying and selling); Miri Lerner & Yeoshua Hendeles, New Entrepreneurs and Entrepreneurial Aspirations among Immigrants from the Former V.S.S.R. in Israel, 36 J. BUS. RES. 59, 59-60 (1996);
28. Light, supra note 11, at 199 (suggesting that cultural heritages may explain the anomalous and persistent overrepresentation of selected cultural minorities in self employment).
29. See GOLD, supra note 23, at 172;
30. Shaila Srinivasan, The Class Position of the Asian Petty Bourgeoisie, 19 NEW COMMUNITY 61 (1992).
31. See GOLD, supra note 24, at 171-72.
32. See Miri Lerner & Yeoshua Hendeles, New Entrepreneurs and Entrepreneurial Aspirations among Immigrants from the Former U.S.S.R. in Israel, 36 J. BUS. RES. 59, 60 (1996) (contending that the accumulation of ethnic assets, including social networks, explains the overrepresentation of immigrants among entrepreneurs); Light, supra note 11, at 199-200 (stating that studies have documented the impact social networks have had on the propensity of immigrants to become entrepreneurs).
33. See Fairlie & Meyer, supra note 20, at 775.
34. See Anuradha Basu & Eser Altinay, The Interaction Between Culture and Entrepreneurship in London's Immigrant Businesses, 20 INT'L SMALL BUS. J. 371, 373-4 (2002) (suggesting that ethnic resources such as "cheap co-ethnic labour and cheap finance from the extended family" stimulate entrepreneurship among certain immigrant groups); Arlene Dallalfar, Iranian Women as Immigrant Entrepreneurs, 8 GENDER & SOC. 541, 542 (1994) ("The appropriation of unpaid women's labor is frequent in immigrant family businesses where this act is justified through domestic bonds of kinship and patriarchy."); Fairlie & Meyer, supra note 20, at 775-76 ("Another ethnic resource is the access of some groups to co-ethnics and family members that may provide an edge in hiring low-paid and trusted workers ℓ An ethnic group's access to rotating credit associations provides another advantage.").
35. See ALLEN & TURNER, supra note 14, at 206 ("Many ethnic groups which have high rates of selfemployment share special ethnic resources not available to outsiders ℓ").
36. See IVAN LIGHT, ETHNIC ENTERPRISE IN AMERICA (1972);
37. Borjas, supra note 6, at 487 (arguing that immigrants have higher self-employment rates because of their ability to supply unique goods to coethnics residing in geographic enclave). However, these ethnic markets can be limiting. See Howard E. Aldrich & Roger Waldinger, Ethnicity and Entrepreneurship, 16 ANNUAL REV. SOC. 111 (1990).
38. See supra notes 26-30 and accompanying text.
39. See Henk Flap, et al., The Social Capital of Ethnic Entrepreneurs and their Business Success, in IMMIGRANT BUSINESSES: THE ECONOMIC, POLITICAL AND SOCIAL ENVIRONMENT 142, 145 (Jan Rath ed., 2000) ("Social networks as a resource explain why a new business is started, its chance of survival and why some ethic groups are particularly successful in small businesses.").
40. See Timothy Bates, Financing Small Business Creation: The Case of Chinese and Korean Immigrant Entrepreneurs, 12 J. BUS. VENTURING 109, 111 (1997) (finding that Korean and Chinese immigrant entrepreneurs rely more heavily on equity capital to finance their businesses than non-minority firms and rely less heavily on debt financing compared to their non-minority counterparts); Timothy Bates, Social Resources Generated by Group Support Networks May Not Be Beneficial to Asian Immigrant-Owned Small Businesses, 72 SOC. FORCES 671, 672 (1994) [hereinafter Social Resources] ("The success and survival patterns of Asian owned firms, this study concludes, are shaped by the very substantial investments of financial capital ℓ of the business owner."); Timothy Bates, An Analysis of Korean-Immigrant-Owned Small-Business Start-Ups with Comparisons to African-American and Nonminority-Owned Firms, 30 URB. AFF. Q. 227, 231 (1994) (finding that Korean immigrant entrepreneurs rely much less upon debt as a source of financing compared to African-American and non-minority male entrepreneurs).
41. See CMTY. DEV. TECH. CTR., THE S. CAL., MINORITY BUS. ATLAS 13 (2000), available at http://volunteer.ml.com/ipo/resources/pdf/ minoritybusinessatlas.pdf (finding that minority entrepreneurs in Southern California, 75% of whom are immigrants, are generally well educated with a college and graduate school education); Pyong Gap Min & Mehdi Bozorgmehr, United States: The Entrepreneurial Cutting Edge, in IMMIGRANT ENTREPRENEURS VENTURING ABROAD IN THE AGE OF GLOBALIZATION 17, 24 (Robert Koosterman & Jan Rath eds., 2003) (finding that the majority of Taiwanese, Indian, and Iranian immigrant entrepreneurs have college education, and nearly half the male adults have masters degrees); Eran Razin, The Income Consequences of Ethnic Entrepreneurial Concentrations, 19 URB. GEOGRAPHY 554, 570 (1998) ("Korean immigrants in New York and Los Angeles, particularly the self-employed, were characterized by high levels of education. About 70% of the self-employed in both metropolitan regions ℓ had at least some college education."); Yen-Fen Tseng, Chinese Ethnic Economy: San Gabriel Valley, Los Angeles County, 16 J. URB. AFF. 169, 175 (1994)(finding that 86% of Chinese entrepreneurs had four years or more of college education).
42. S See Timothy Bates, Exiting Self-Employment: An Analysis of Asian Immigrant-Owned Small Business, 13 SMALL BUS. ECON. 171, 171 (1999) ("Particularly successful entrepreneurs tend to be highly educated, their firms are well capitalized ℓ"); Social Resources, supra note 33, at 672 ("The success and survival patterns of Asian owned firms, this study concludes, are shaped by the very substantial investments of financial capital and the impressive educational credentials of the business owners."); Brian Headd, Redefining Business Success: Distinguishing Between Closure and Failure, 21 SMALL BUS. ECON. 51, 55 (2003) (finding that factors that best explain the likelihood of survival include having starting capital greater than $50,000 and having a college degree).
43. See TERESA A. SULLIVAN, ELIZABETH WARREN & JAY L. WESTBROOK, THE FRAGILE MIDDLE CLASS: AMERICANS IN DEBT 42 (2000).
44. See KOTKIN & OZUNA, supra note 15, at 3;
45. U.S. BUREAU OF THE CENSUS, PROFILE OF SELECTED ECONOMIC CHARACTERISTICS: LOS ANGELES CITY 2 (2000) (reporting that 40.9% of the residents of Los Angeles City were foreign-born in 2000).
46. See Karen B. Leonard & Chandra S. Tibrewal, Asian Indians in Southern California: Occupations and Ethnicity, in IMMIGRATION AND ENTREPRENEURSHIP: CULTURE, CAPITAL AND ETHNIC NETWORKS 141 (Ivan Light & Parminder Bhachu eds., 2004);
47. Min & Bozorgmehr, supra note 15, at 708 (indicating that Los Angeles is one of the top metropolitan areas in the United States in self-employment rate).
48. See KOTKIN & OZUNA, supra note 15, at 3;
49. U.S. CENSUS BUREAU, AMERICAN FACTFINDER-FACT SHEET LOS ANGELES COUNTY, CALIFORNIA (2000) (reporting that 36.2% of the population in Los Angeles County in 2000 were foreign-born).
50. See Roper Center, supra note 18, at 50 (In the survey, 44% of the self-employed respondents indicated that they was born outside the United States).
51. The yield rate was calculated by dividing the number of surveys collected by the total number of petitioners present at the hearings that the research assistants for this study attended.
52. During the period of this study (January 2005 through January 2006), 12,049 bankruptcy petitions were filed. The 1,500 surveys collected represent a yield of 12.45%.
53. During the period of this study (January 2005 through January 2006), a total of 11, 929 bankruptcy petitions were filed in the San Fernando Valley Division of the United States Bankruptcy Court for the Central District of California. Approximately 94% were filed under chapter 7 (N=11,162), approximately 5.5% were filed under chapter 13 (N=696), and .5% were filed under chapter 11 (N=71). See United States Bankruptcy Courts Central District of California, 2005 and 2006 Statistics, available at http://www.cacb.uscourts.gov. In the bankruptcy sample, a total of 1,500 surveys were completed. Similar to the chapter composition, over 97% of the surveys were submitted by chapter 7 debtors (N=1,465), .5% were submitted by chapter 11 debtors (N=8) and the balance were submitted by chapter 13 debtors (N=27).
54. See TERESA A. SULLIVAN, ELIZABETH WARREN & JAY LAWRENCE WESTBROOK, AS WE FORGIVE OUR DEBTORS: BANKRUPTCY AND CONSUMER CREDIT IN AMERICA 345 (1989).
55. The characteristics of the general population in our bankruptcy sample were reported elsewhere. See Rafael Efrat, Minority Entrepreneurs in Bankruptcy, 15 GEO. J. ON POVERTY L. & POL'Y 95, 106-08 (2008).
56. See U.S. CENSUS BUREAU, AMERICAN FACTFINDER-FACT SHEET- LOS ANGELES COUNTY (2000).
57. See id. (reporting that in 2000 36.2% of the population in Los Angeles County was foreign-born).
58. We first computed the observed frequencies and expected frequencies of native- and foreign-born filing for bankruptcy in our sample. We found that the test statistics for our observed and expected frequencies was 12.1, whereas the critical value for 95% confidence level at the right hand tail of chisquare distribution with one degree of freedom was 3.841.
59. Using the table of areas for the standard normal distribution, we found that the Z value for 95% confidence level was 1.64. The test statistic was 3.4. Since the test statistic was greater than the critical value of 1.64, the null hypothesis was rejected. That is, foreign-born petitioners were not equally represented or overrepresented in the bankruptcy sample. Instead, the alternative hypothesis may be adopted.
60. A previous study found that immigrants are as likely to file for bankruptcy protection as native-born. See SULLIVAN, WARREN & WESTBROOK, supra note 36, at 51.
61. The average age of immigrants in the bankruptcy sample was 42.79 (N=461), with a standard deviation of 12.3 and a median of 42 years old. Among native-born in the bankruptcy sample, the average age was 41.06 (N=997) with a standard deviation of 13.69 and a median of 39 years old. The difference was statistically significant at p=.021. Although the immigrants in the bankruptcy sample were older than the native-born, the relationship is reversed outside of bankruptcy. Among foreign-born adults residing in California, the median age in 2005 was 38, compared to 44 among California's native-born. See Public Policy Institute of California, Immigrants in California 1 (2007) (unpublished report, on file with author)
62. Among immigrant petitioners in our sample, 98.7% filed under chapter 7 (N=465), and 1.3% filed under chapter 13 (N=6). Among native-born petitioners, 97-9% filed under chapter 7 (N=989), and 2.1% filed under chapter 13 (N=21). The differences were not statistically significant.
63. Among immigrants in the bankruptcy sample, 47.8% (N=225) were represented by an attorney, compared to 47.9% (N=484) among the native-born petitioners. The difference was not statistically significant. Other studies have documented a similar ratio of pro se debtors to debtors with counsel in the Central District of California. See Geraldine Mund, A Report From the Central District of California on Pro Se and Paralegal-Assisted Filings, in 67th Ann. Meeting of the Nat'l Conf. of Bankr. Judges 7-9 (Oct. 1993) (unpublished manuscript, on file with author) (finding that in the Central District of California, 50% of the chapter 7 and 13 cases filed in 1991 and 1992 were commenced without the assistance of an attorney).
64. Among the native-born petitioners in our sample, 65% were identified as white (N=657), 11.5% as black (N=116), 2.8% as Asian (N=28), 16.6% as Hispanic (N=168), .7% as Native American (N=7), and 2.7% as other races. In contrast, among the immigrant petitioners in our sample, 16.6% were identified as white (N=78), 1.3% as black (N=6), 14.6% as Asian (N=69), 63.5% as Hispanic (N=299), and 4% as other races. These differences were statistically significant at p=.000.
65. Among immigrants in the bankruptcy sample, the educational attainment was as follows: no schooling: 2.1% (N=10); 6th grade or less: 3% (N=14); 7th to 12th grade with no diploma: 18.5% (N=87); high school graduate: 24.6% (N=H6); some college work: 18.9% (N=89); associate degree: 9.1% (N=43); bachelors degree: 15.1% (N=71); advanced degree: 4.2% (N=20); not available: 4.5% (N=21). In contrast, among the native-born petitioners in our bankruptcy sample, the educational attainment was as follows: no schooling: .1% (N=1); 6th grade or less: .4% (N=4); 7th to 12th grade with no diploma: 4.6% (N=46); high school graduate: 23.1% (N=233); some college work: 37.5% (N=379); associate degree: 8.4% (N=125); bachelors degree: 14.3% (N=144); advanced degree: 6.7% (N=68); not available: .9% (N=9). These differences were statistically significant at p=.000. A similar disparity in educational attainment exists outside of bankruptcy. See Public Policy Institute of California, supra note 51, at 2 ("Overall, 24 percent of immigrants ages 25 and older have graduated from college (compared to 28 percent of California natives in the state), and 38 percent have not completed high school (compared to 10 percent of California natives.")).
66. The marital status of the native-born petitioners in our sample was as follows: single: 40.8% (N=412); married: 27.3% (N=276); divorced or separated: 26.3% (N=266); widowed: 3.8% (N=38); not available: 1.8% (N=18). In contrast, among the foreign-born petitioners in our sample the marital status was as follows: single: 31.8% (N=150); married: 42.5% (N=200); divorced or separated: 20.8% (N=98); widowed: 3.0% (N=14); not available: 1.9% (N=9). These differences were statistically significant at p=.000. A similar pattern exists outside of bankruptcy. See U.S. CENSUS BUREAU, AMERICAN COMMUNITY SURVEY, MARITAL STATUS OF THE POPULATION 15 YEARS AND OVER BY SEX AND U.S. CITIZENSHIP STATUS, Table 1.2a (2003) (Among the native-born, 52.7% were married, 12.7% were divorced or separated, 6.4% were widowed, and 28.1% were single; among the foreign-born, in contrast, 62.1% were married, 9.4% were divorced or separated, 5% were widowed, and 23.5% were single).
67. Among the native-born petitioners, 77.8% (N=452) identified affiliation with the Christian faith compared to 89.6% (N=276) among the foreign-born in the sample. Among the Christians in our sample, there was a large disparity among those who belong to the Catholic denomination. Although only 193% (N=195) of native-born petitioners were identified as Catholic, 40.3% (N=190) of the immigrants in our sample were Catholic. A similar disparity in religious affiliation between immigrants and native-born exists outside of bankruptcy. See PEW FORUM ON RELIGION & PUBLIC LIFE, U.S. RELIGIOUS LANDSCAPE SURVEY 47 (2008), available at http://religions.pewforum.org/ pdf/report-religious-landscape-study-full.pdf (finding that nearly half of all immigrants in the United States (46%) are Catholic, compared with 21% of the native-born).
68. Among the immigrants in our bankruptcy sample, the average monthly household income was $3,304 (N=154), with a standard deviation of 4,416 and a median of $2,300. In contrast, among the native-born in our sample, the average monthly household income was $4,002 (N=226), with a standard deviation of 6,341 and a median of $3,200. This difference is not statistically significant. The average number of dependents reported by immigrants in our sample was 1.83 (N=448), with a standard deviation of 1.5 and a median of 2. In contrast, among native-born in our sample, the average number of dependents was 1.24 (N=900), with a standard deviation of 1.3 and a median of 1. The difference was statistically significant at p=.000. Finally, immigrants in our bankruptcy sample reported an average value of their assets at $25,414 (N=247), with a standard deviation of 114,959, and a median of $3,000. In contrast, the native-born in our sample reported an average value of their assets at $31,031 (N=711), with a standard deviation of 120,493 and a median of $4,500. The difference was not statistically significant.
69. The native-born petitioners in our sample reported average outstanding debt of $86,133 (N=859), with a standard deviation of 350,526 and a median of $38,000. In contrast, the foreign-born petitioners in our sample reported an average of outstanding debt of $61,283 (N=353), with a standard deviation of 121,136 and a median of $30,000. The difference was not statistically significant. Also, the native-born petitioners reported an average net worth of negative $67,116 (N=668), with a standard deviation of 394,629, and a median of negative $30,000. In contrast, the foreign-born petitioners reported an average net worth of negative $49,636 (N=226), with a median of negative $27,611. The difference was not statistically significant. Lastly, the native-born petitioners reported an average debt-to-household-income ratio of 2.45 (N=207), with a standard deviation of 4.6 and a median of 1.2. In contrast, foreign-born petitioners in our sample reported an average debt to household income ratio of 2.07, with a standard deviation of 2.6 and a median of 1.1. The difference was not statistically significant.
70. The native-born petitioners attributed their bankruptcy filings to the following causes: failed business: 10% (N=54); personal or family calamities: 22.5% (N=122); medical condition: 23.6% (N=128); employment-related problems: 19.6% (N=106); credit card debt: 22.7% (N=123); housing-related problems: 1.7% (N=9). In contrast, the foreign-born petitioners attributed their bankruptcy filings to the following causes: failed business: 7.6% (N=18); personal or family calamities: 15.6% (N=36); medical condition: 18.6% (N=44); employment-related problems: 33.3% (N=79); credit card debt: 24.1% (N=57); housing-related problems: 8% (N=2). The differences were statistically significant at p=.001.
71. See U.S. CENSUS BUREAU, AMERICAN FACTFINDER-PROFILE OF ECONOMIC CHARACTERISTICS: 2000-Los ANGELES COUNTY (2000) (reporting that 8.6% of the labor force was self-employed).
72. See Roper Center, supra note 18, at 50 (In the survey, 44% of the self-employed respondents indicated that they were born outside the United States).
73. We first computed the observed and expected frequencies of native- and foreign-born entrepreneurs in our sample filing for bankruptcy. We found that the test statistics for our observed and expected frequencies was 28.7, while the critical value for 95% confidence level at the right hand tail of chi-square distribution with one degree of freedom was 3.841.
74. Using the table of areas for the standard normal distribution, we found that the Z value for 95% confidence level was 1.64. The test statistic was 5.4. Since the test statistic was greater than the critical value of 1.64, the null hypothesis was rejected. That is, foreign-born entrepreneurs were not equally represented or overrepresented in the bankruptcy sample. Instead, the alternative hypothesis could be adopted.
75. The proportion of the country of origin relative to the total immigrant entrepreneurs in the population of Los Angeles County was estimated based on a survey done of a sample of small business owners in 1999. See Roper Center, supra note 18, at 50-51.
76. Native-born self-employed in our bankruptcy sample had a mean age of 46.5 (N=153), with a standard deviation of 13.4 and a median age of 45. In contrast, native-born wage earners had a mean age of 40.7 (N=844), with a standard deviation of 13.5 and a median age of 38. Foreign-born wager earners had a mean age of 42.6 (N=411), with a standard deviation of 12 and a median age of 42. The age difference between the native-born wage earners and the native-born self-employed was statistically significant at p=.000. Similarly, foreign-born self-employed in our bankruptcy sample had a mean age of 441 (N=50) with a standard deviation of 11.9 and a median age of 43. In contrast, foreign-born wage earners had a mean age of 42.6 (N=411), with a standard deviation of 12.4 and a median age of 42. The difference in age between the foreign-born wage earners and the self-employed was not statistically significant.
77. Among native-born self-employed petitioners in our sample, 99.3% (N=151) filed under chapter 7, while one petitioner filed under chapter 13. Similarly, all of the foreign-born self-employed petitioners filed under chapter 7 (N=51).
78. Of the native-born self-employed petitioners in our sample, 49.3% (N=75) were represented by counsel, whereas 43.1% (N=22) of the foreign-born self-employed were represented by counsel. The difference was not statistically significant.
79. Among the native-born self-employed petitioners in our sample, 66.4% (N=101) were male, and among the foreign-born self-employed petitioners, 62.7% (N=32) were male.
80. See FAIRLIE, supra note 9, at 26 (reporting that in 2003, 68% of the self employed in the United States were male);
81. see also Ying Lowrey, U.S. Sole Proprietorships: A Gender Comparison, 1985-2000 5 (2005), available at http://www.sba.gov/advo/ research/rs263tot.pdf(The proportion of female sole proprietors increased, from less than 31 percent in 1985 to more than 37 percent in 2000.").
82. The marital status of the native-born entrepreneurs in our sample was as follows: single: 36.2% (N=55); married: 36.2% (N=55); divorced or separated: 18.4% (N=28); widower: 4.6% (N=7); not available: 4.6% (N=7). The racial background of the native-born entrepreneurs was as follows: white: 83.6% (N=127); black 3.9% (N=6); Asian: 3.3% (N=5); Hispanic: 5.9% (N=9); Native American: .7% (N=1).
83. The marital status of the foreign-born entrepreneurs in our sample was as follows: single: 23.5% (N=12); married: 51% (N=26); divorced or separated: 19.6% (N=10); widower: 0% (N=0); not available: 5.9% (N=3). The racial background of the foreign-born entrepreneurs was as follows: white: 23.5% (N=12); black: 0% (N=0); Asian: 11.8% (N=6); Hispanic: 54.9% (N=28); Native American: 0% (N=0). Among the native-born entrepreneurs, 58.1% (N=50) were Christian; 19.8% (N=17) were Jewish; and 22.1% (N=19) were affiliated with other religions. In contrast, among the foreign-born entrepreneurs, 68.75% (N=22) were Christian; 6.25% (N=2) were Jewish; and 25% (N=8) were affiliated with other religions. These differences in religious affiliation were statistically significant at p=.009.
84. The educational attainment of native-born wage earners in the bankruptcy sample was as follows: no schooling: .1% (N=1); 6th grade or less: .5% (N=4); 7th through 12th grade with no diploma: 5% (N=43); high school graduate: 24.5% (N=210); some college: 38.9% (N=333); associate degree: 12.6% (N=108); bachelors degree: 13.1% (n=112); advanced degree: 4.7% (N=40); not available: .7% (N=6). In contrast, the educational attainment of native-born entrepreneurs in the bankruptcy sample was as follows: no schooling: 0% (N=0); 6th grade or less: 0% (N=0); 7th through 12th grade with no diploma: 2% (N=3); high school graduate: 15% (N=23); some college: 30.1% (N=46); associate degree: 11.1% (N=17); bachelors degree: 20.9% (n=32); advanced degree: 18.3% (N=28); not available: 2.7% (N=4). The differences were significant at p=.000. The disparity between the educational attainment of wage earners and entrepreneurs among the foreign-born was similar but not as robust. The educational attainment of foreign-born wage earners in the bankruptcy sample was as follows: no schooling: 2.1% (N=9); 6th grade or less: 3.3% (N=14); 7th through 12th grade with no diploma: 19.3% (N=81); high school graduate: 25% (N=105); some college: 19% (N=80); associate degree: 9% (N=38); bachelors degree: 13.8% (n=58); advanced degree: 4% (N=17); not available: 4.3% (N=18). In contrast, the educational attainment of foreign-born entrepreneurs in the bankruptcy sample was as follows: no schooling: 2% (N=1); 6th grade or less: 0% (N=0); 7th through 12th grade with no diploma: 11.8% (N=6); high school graduate: 21.6% (N=11); some college: 17.6% (N=9); associate degree: 9.8% (N=5); bachelors degree: 25.5% (n=13); advanced degree: 5.9% (N=3); not available: 5.9% (N=3). The differences between foreign-born entrepreneurs and wage earners were not statistically significant.
85. See supra note 73.
86. See supra note 34 and accompanying text.
87. See Magnus Lofstrom & Chunbei Wang, Mexican-American Self-Employment: A Dynamic Analysis of Business Ownership 15 (2007), available at http://www.utdallas.edu/~lofstrom/MexAmSEOct07.pdf (reporting that "educational attainment among Mexicans is considerably lower than among whites").
88. On average, the native-born entrepreneur in our bankruptcy sample reported 11.7 (N=134) years of prior business ownership experience, with a standard deviation of 9.9 and a median of 9.5 years. In contrast, the foreign-born entrepreneur reported 6.38 (N=39) years of prior business ownership experience, with a standard deviation of 6 and a median of 5 years. The difference was statistically significant at p=.001.
89. On average the native-born entrepreneur in our bankruptcy sample reported owning his failed business for 8.5 years (N=102), with a standard deviation of 8 and a median of 6. In contrast, the foreign-born entrepreneur reported owning his business for 5.5 (N=38), with a standard deviation of 5 and a median of 4. The difference was statistically significant at p=.038.
90. On average, the native-born entrepreneur in our bankruptcy sample reported previously owning .94 business ventures (N=135), with a standard deviation of 1.6 and a median of 0. In contrast, the foreignborn entrepreneur in the bankruptcy sample reported previously owning an average of .65 business ventures (N=40), with a standard deviation of 1 and a median of 0. The differences were not statistically significant.
91. Among native-born entrepreneurs in our bankruptcy sample, the monthly household income was $5,855 (N=46), with a standard deviation of 13,245 and a median of $3,550 per month. In contrast, among the foreign-born entrepreneurs in our bankruptcy sample, the monthly household income was $4,039 (N=20), with a standard deviation of 4,228 and a median of $2,585 per month. The difference in household income was not statistically significant. Similarly, the native-born entrepreneurs in our bankruptcy sample had an average of 1.17 dependents (N=143), with a standard deviation of 1.3 and a median of 1. In contrast, the foreign-born entrepreneurs in our bankruptcy sample had an average of 1.64 dependents (N=45), with a standard deviation of 1.4 and a median of 1. The difference in the number of dependents was statistically significant at p=.045.
92. The native-born entrepreneurs in our bankruptcy sample had on average 6.96 employees (N=133), with a standard deviation of 21 and a median of 1. In contrast, the foreign-born entrepreneurs in our bankruptcy sample had on average 2.71 employees (N=38), with a standard deviation of 5 and a median of 1. The difference in the number of employees was not statistically significant.
93. The native-born entrepreneurs in our bankruptcy sample reported that 39.07% (N=99) of their business financing was based on credit card debt, with a standard deviation of 42 and a median of 20%. In contrast, the foreign-born entrepreneurs in the bankruptcy sample reportedly that 45.63% (N=32) of their business financing was based on credit card debt, with a standard deviation of 44 and a median of 50%. The difference was not statistically significant. The high rate of reliance by foreign-born entrepreneurs on credit card debt is also reflected in the total amount of outstanding credit card debt they reported. The native-born entrepreneurs in our bankruptcy sample reported owing $48,165 (N=114) in credit card debt, with a standard deviation of 49,013 and a median of $35,000. In contrast, the foreign-born entrepreneurs in the sample reported owing $63,427 (N=36) in credit card debt, with a standard deviation of 64,138 and a median of $51,500. The difference was not statistically significant.
94. See Ivan Light, et al., Korean Rotating Credit Association in Los Angeles, in IMMIGRANT AND MINORITY ENTREPRENEURSHIP: THE CONTINUOUS REBIRTH OF AMERICAN COMMUNITIES, 171, 171 (John S. Butler and George Kozmetsky eds., 2004) ("Obtaining loan capital poses an obstacle for all small business ventures, but the problem is especially severe for immigrant or ethnic minority entrepreneurs, who lack credit ratings, collateral, or are the victims of ethno-racial discrimination."); Yen-Fen Tseng, Ethnic Resources as Forms of Social Capital: A Study on Chinese Immigrant Entrepreneurship in Los Angeles, 8 (unpublished manuscript, on file with author) ("Typically, immigrant entrepreneurs have difficulty in borrowing from banks because they lack a formal credit history").
95. See CMTY. DEV. TECH. CTR., supra note 34, at 11 (reporting that many minority entrepreneurs (75% of whom are immigrants) in southern California rely on high cost capital to finance their business, including credit cards).
96. Among the native-born entrepreneurs, the average outstanding debt obligation was $247,115 (N=127), with a standard deviation of $858,951 and a median of $72,000. In contrast, the foreign-born entrepreneurs owed an average of $163,939 (N=40), with a standard deviation of 272,600 and a median of $63,250. The net worth of the native-born entrepreneurs was also less than the net worth of the foreignborn entrepreneurs in our sample. The average net worth of the native-born entrepreneurs was negative $240,555 (N=105), with a standard deviation of 927,567 and a median of negative $62,000. In contrast, the foreign-born entrepreneurs' average net worth was negative $132,757 (N=32), with a standard deviation of 318,229 and a median of negative $57,500. The differences were not statistically significant.
97. See supra note 33 and accompanying text.
98. The native-born entrepreneurs in our sample were engaged in the following industries: 29.8% (N=24) retail; 3.3% (N=4) manufacturing; 1.7% (N=2) wholesale; and 75% (N=90) service sector. In comparison, foreign-born entrepreneurs were engaged in the following industries: 42% (N=14) retail; and 576% (N=19) service sector. The differences were statistically significant at p=.046.
99. See supra note 8 and accompanying text.
100. See supra notes 9-11 and accompanying text.
101. See supra note 83 and accompanying text.
102. see also Borjas, supra note 6, at 487 (finding that over 27% of self-employed immigrants are in the retail industry compared to 17% of the native-born self-employed); CMTY. DEV. TECH. CTR, supra note 34, at 14 (finding that 27% of minority-owned small businesses in the Southern California (most of which are owned by immigrants) are engaged in the retail industry and 53% in the service industry); Maria Dickerson & Don Lee, Business is 'Robust' for Small LA. County Firms, LOS ANGELES TIMES, Sept. 15, 1999, at A1 (reporting that immigrant and ethnic minority entrepreneurs in Los Angeles County tend to concentrate in low-margin retail businesses that are generally smaller than the businesses of non-minority native-born entrepreneurs).
103. See supra notes 81-82 and 87 and accompanying text.
104. See supra note 80 and accompanying text.
105. See supra notes 74, 77-79 and accompanying text.
106. See supra Table 2 and accompanying text.
107. See supra notes 31-32 and accompanying text.
108. See supra note 85 and accompanying text.
109. See ANNA PAULSON, AUDREY SINGER, ROBIN NEWBERGER & JEREMY SMITH, THE BROOKINGS INSTITUTION, FINANCIAL ACCESS FOR IMMIGRANTS: LESSONS FROM DIVERSE PERSPECTIVES 26, 33 (May 2006), available at http://www.chicagofed.org/community-development/files/fai-lessons-from- diverse-perspectives.pdf.
110. See supra note 83 and accompanying text.
111. See Andrew I. Schoenholtz & Kristin Stanton, Reaching the Immigrant Market: Creating Homeownership Opportunities for New Americans, 4 (2001), available at www.fanniemaefoundation.org/programs/pdf/rep-immigrant.pdf.
112. See SULLIVAN, WARREN & WESTBROOK, supra note 41 at 42 (immigrants have lower access to legal counsel compared to the native-born entrepreneurs);
113. see also NATIONAL ASIAN PACIFIC AMERICAN LEGAL CONSORTIUM, EQUAL JUSTICE, UNEQUAL ACCESS: IMMIGRANTS AND AMERICA'S LEGAL SYSTEM 1 (2005), available at http://www.advancingequality.org/files/equaljustice.pdf.
114. See NATIONAL ASIAN PACIFIC AMERICAN LEGAL CONSORTIUM, supra note 101, at 3.
115. See id; see also JOANNE I. MOORE & MARGARET FISHER, IMMIGRANTS IN COURTS 20 (1999) (describing the culturally imbedded beliefs of immigrants that affect their perceptions about the court system in the United States).
116. 103 See NATIONAL ASIAN PACIFIC AMERICAN LEGAL CONSORTIUM, supra note 101, at 3.
117. See id. at 34, 36 (reporting that 20% of the population in California are immigrants with limited English proficiency, and 38.2% of the foreign-born reportedly have limited English proficiency).
118. See supra Table 3 and accompanying text.
119. See id.
120. See Bates, supra note 35 and accompanying text.
121. See supra note 33 and accompanying text.
122. See Borjas, supra note 6 (noting that self-employed Asian immigrants reported higher mean annual incomes than any other racial group).
123. See supra notes 33 and accompanying text.
124. See supra note 29 and accompanying text.
125. See Nathalie Martin, The Role of History and Culture in Developing Bankruptcy and Insolvency Systems: The Perils of Legal Transplantation, 28 B.C. INT'L & COMP. L. REV. 1, 52-3 (2005) (noting that Japan has strong cultural attitudes against bankruptcy); Charles J. Tabb, Lessons from the Globalization of Consumer Bankruptcy, 30 LAW & SOC. INQUIRY 763, 769 (2005) (referring to studies finding that East Asian cultures, which emphasize the importance of harmony, reputation, and cooperation, discourage the use of bankruptcy to resolve financial problems).
126. See OFFICE OF ADVOCACY, SMALL BUS. ADMIN., SMALL BUSINESS PROFILE: CALIFORNIA 1 (2005), available at http://www.sba.gov/advo/research/profiles/05ca.pdf; OFFICE OF ADVOCACY, SMALL BUS. ADMIN., SMALL BUSINESS PROFILE: UNITED STATES 1 (2005), available at http://www.sba.gov/advo/research/profiles/05us.pdf.
127. See OFFICE OF ADVOCACY SMALL BUS. ADMIN., SMALL BUSINESS PROFILE: CALIFORNIA 1 (2007), available at http://www.sba.gov/advo/research/profiles/07ca.pdf (finding that in 2007, California had 427,700 Hispanic-owned small business owners, which was more than any other state).
128. See MINORITY BUS. DEV. AGENCY, DEP'T OF COMMERCE, THE STATE OF HISPANIC BUSINESS 1 (Dec. 3, 2001) (unpublished manuscript, on file with the author) ("The average size of Hispanic-owned businesses is substantially lower than nonminority firms.").
129. See David L. Torres, Success and the Mexican American Businessperson, 6 RES. SOG. ORG. 313, 314 (1988) ("The survival rate for Hispanic firms is lower than the norm for business in general.")
130. See Aparna Mathur, A Spatial Model of the Impact of State Bankruptcy Exemptions on Entrepreneurship 31 (2005) ("The probability of small business closures is significantly ℓ higher for Blacks and Hispanics."); Alicia Robb, The Role of Race, Gender, and Discrimination in Business Survival 72 (2000) (unpublished Ph.D. dissertation, University of North Carolina at Chapel Hill) (on file with author) ("Black-owned and Hispanic-owned businesses were still more likely to close than their white-owned counterparts.").