Studies have found that Middle Eastern and South Asian immigrants experienced a decrease in wage earnings after 9/11. The 9/11 backlash and the worsened wage-sector opportunities may have also changed their self-employment decisions and outcomes. This paper examines the effect of 9/11 on the self-employment outcomes of Middle Eastern and South Asian immigrants. Using CPS Data 2000 to 2005 and a difference-in-differences approach, we analyze the changes in their self-employment entry/exit decisions as well as self-employment earnings after 9/11.
Our results are interesting. First, 9/11 has a negative impact on Middle Eastern and South Asian immigrants’ entry decision – they are less likely to enter self-employment after 9/11. Such results show that researchers who fail to distinguish self- and wage-employment as in the previous literature may overlook some important effects of 9/11 on immigrants’ labor market outcomes. In addition, the decreased entries among the Middle Eastern and South Asian immigrants are the result of fewer entries into industries that require high levels of capital. Our results also indicate that these effects continue to exist even in the long run.

Second, 9/11 has no negative impacts on Middle Eastern and South Asian immigrants’ self-employment exit decisions or their self-employment earnings. In fact, they experienced a large increase in self-employment earnings after 9/11, and Quantile Regression Analysis shows that this increase is found at both lower and upper tail of the distribution.