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Gujarati hotels and Chaldean liquor stores

UPDATE 2 (3/27, 8:24am EDT) Great academic paper on Jewish domination of the diamond trade (see end of post)

UPDATE (3/26, 12:34EDT) Great NYT mag article explaining the details of the Gujarati hotel story (see end of post)

I’ve long been fascinated by the Vietnamese nail salon phenomenon. My female friends report a remarkably high concentration of Vietnamese women in nail salons in US cities. I even heard there was a nail trade magazine for the US market that is in Vietnamese. Alas I was never able to do more to document this systematically. Today I happened to stumble over a University of Chicago Ph.D. dissertation by Martin Mandorff that finally nailed it (bad pun was unavoidable).

Mandorff shows that ethnic specialization is remarkably widespread among US immigrants. The following table from 2000 census data shows the leading specializations (the OVER is how much males from that group are over-represented in the industry,* is for self-employed and ** is for employees).

Gujaratis (already famous worldwide as entrepreneurs and traders) are even more specialized as hotel owners. And then there is a group that I had only vaguely heard of: Chaldeans – they are Aramaic-speaking Roman Catholics from northern Iraq. They’ve got the liquor franchise.

It’s amazing how something so unexpected appears from the spontaneous efforts and social interactions of ethnic entrepreneurs. Mandorff of course has much more detailed and analytical explanations, which you should check out.

The phenomenon of ethnic business networks is of course not new, but it’s far more widespread than most people realize (almost every African nation has an indigenous group known as the entrepreneurs and traders –the Hausa in Nigeria, Gurage in Ethiopia, Serahule in the Gambia, etc.) And it’s too well known to even bother mentioning the famous merchant diasporas like the Jews, the Lebanese, East African Indians, overseas Chinese in SE Asia, and so on. Thomas Sowell has written at least TWO insightful books on the phenomenon: Race and Culture, and  Migrations and Cultures.  Avner Greif’s now standard explanation  (at least partial explanation) for ethnic networks was that small ethnic clusters could use the the threat of explusion from the group to enforce contracts and other trustworthy behavior (a more precise version was worked out in his  famous article on the experience of Mediterranean traders called Maghribis –11th century Jews in Cairo).

It’s all a very big hint that social and family relationships, culture, and self-organizing networks are an important part of economic development that has been much neglected by previous generations of development economists. Now the tide is turning – I gave a whole two-hour Ph.D. class on Wednesday that only scratched the surface of recent research by economists on culture, social norms, and development.

UPDATE: just received link to an NYT article by the always amazing Tunku Varadarajan (formerly at Wall Street Journal, now colleague of mine at NYU) explaining where the Gujarati dominance of hotels came from:

70 percent of all Indian motel owners — or a third of all motel owners in America — are called Patel, a surname that indicates they are members of a Gujarati Hindu subcaste. … ”In some American small towns they think ‘Patel’ is an Indian word for ‘motel.’”

{Patels are members of a caste called} vaishyas, or traders, who were once employed to calculate the tithes that were owed to medieval kings by farmers in Gujarat, an Indian state on the Arabian Sea.

More great details follow in Tunku’s article on how the “Patel Motel Cartel” came about in America.

UDPATE 2: An academic paper that traces the origins of Hasidic Jews dominating the 47th Street Diamond District in Manhattan all the way back to the 11th century, with some suggested explanations.

This entry was posted in Academic research, Economics principles, Entrepreneurship, Migration and tagged . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.

12 Comments

  1. Tim wrote:

    Donut shops in California are operated by Cambodians. See this NY Times article: http://www.nytimes.com/1995/05/26/us/long-beach-journal-from-cambodia-to-doughnut-shops.html?pagewanted=1

    (Also: Greek diners in the east.)

    Posted March 26, 2010 at 1:15 am | Permalink
  2. Joe wrote:

    there must be geographical differences, though, right?

    Posted March 26, 2010 at 5:15 am | Permalink
  3. avam wrote:

    “It’s all a very big hint that social and family relationships, culture, and self-organizing networks are an important part of economic development that has been much neglected by previous generations of development economists. Now the tide is turning..”

    At last!!!

    Posted March 26, 2010 at 5:22 am | Permalink
  4. NigerianEconomist wrote:

    In Nigeria, the Ibos are the traders and entreprenuers whilst the Hausas are the animal farmers/tanneries. That’s why Ibos are commonly known as the ‘Nigerian Jews’. Go figure.

    Posted March 26, 2010 at 9:32 am | Permalink
  5. Matt Richmond wrote:

    The only disappointing part of this article was a complete lack of information concerning caucasian americans. What do we do? Is there some form of club I can join too? I feel so left out…

    Posted March 26, 2010 at 10:13 am | Permalink
  6. Andy wrote:

    Matt,

    Joining the Republican Party comes to mind…

    Posted March 26, 2010 at 10:38 am | Permalink
  7. Douglas Barnes wrote:

    The remarkable thing is that the chart Bill is showing is not a list of percentages, but a list of multiples. That is, Gujarati speaking foreign-born males are 72 TIMES more likely to be in the traveller accommodation business than the entire population of foreign-born males. Wow.

    Posted March 26, 2010 at 10:58 am | Permalink
  8. Asif Dowla wrote:

    Bill:

    Can you post a link to the printed version ofyour two-hour lecture?

    Posted March 26, 2010 at 12:14 pm | Permalink
  9. Jason wrote:

    Check out this article by Barak Richman on Jewish diamond merchants in New York City: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=349040.

    Posted March 26, 2010 at 11:10 pm | Permalink
  10. James wrote:

    It doesn’t seem to me that Grief’s explanation – which relies on repeated transactions across businesses within an ethnic community – can explain many of these cases. Its not obvious that many of these businesses – nail salons, diners, gas stations – would necessarily involve such transactions. I wonder how much of this is driven by intergenerational transmission of human capital (learning by doing) in family businesses.

    Posted March 27, 2010 at 3:01 pm | Permalink
  11. Stuart wrote:

    Twenty years ago, I remember hearing that nearly all of the news agents in London were named Patel–and that a growing number of them in New York City were too.

    Posted March 28, 2010 at 12:23 am | Permalink
  12. DS wrote:

    Seems to make sense…it mirrors the idea of chain migration, no?

    Posted March 29, 2010 at 3:52 pm | Permalink

4 Trackbacks

  1. [...] This post was mentioned on Twitter by Mike Cane, Ruben Harris, William Easterly, William Easterly, Beyond Profit and others. Beyond Profit said: So fab — Gujarati hotels and Chaldean Liquor Stores – http://bit.ly/cfWxYD – via @bill_easterly [...]

  2. [...] Marzo 28, 2010 I read this post by William Easterly yesterday and has interesting references to articles, dissertations and others on the topic. Is kinda fun (interesting) data on why all motels are called Patel, why the vietnamese dominate the world of nail salons, etc…CLICK HERE [...]

  3. [...] – Quantifying the power of ethnic business networks. [...]

  4. [...] Job  clusters among US immigrants – Bill Easterly finds that Vietnamese work in nail salons and Chaldeans (Roman Catholics from northern Iraq) in liquor stores [...]