Immigrants' Propensity to Self-Employment: Evidence from Canada

TL;DR: In this paper, a logistic regression was used to predict the propensity of self-employment of immigrants in the 1995 tax year and found that immigrants with better qualifications and means were more likely to become self-employed.

Abstract: Explanations for immigrant entrepreneurship commonly stress the "blocked mobility thesis" and the "enclave effect", which focus on the opportunities that the immigrant enclave offers to ethnic entrepreneurs. However, there are other types of attributes that enable the immigrants to find self-employment which can be revealed in the pattern of self-employment in different entry cohorts of immigrants to Canada between 1980 and 1995. The analysis focused in particular on whether immigrants with less human capital are more inclined to self-employment. The study was based on the Longitudinal Immigration Data Base, developed by Citizenship and Immigration Canada and Statistical Canada, covering data on 1.5 million immigrants, 69% of which are between the working ages of 20 and 64. Descriptive statistics showed that the immigrants' propensity to self-employment changes over time and by entry cohort. A logistic regression was used to predict the propensity of self-employment of immigrants in the 1995 tax year. The findings suggested that self-employment is often a source to supplement the immigrant's labor market income, and the possibility of self-employment increases with the number of years the immigrant had been in Canada. Moreover, male immigrants were more likely to become self-employed than their female counterparts. Those with higher human capital were also more inclined toward self-employment, as were immigrants with more resources and qualifications. Immigrants from Europe and North American showed a higher tendency to self-employment than immigrants from Asia, Africa, and Latin America.Whether they were attracted or driven to self-employment, Canadian immigrants with better qualifications and means were more likely to become self-employed. (CBS)