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Comparison of Self Employment: Immigrants and Canadians

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Literature

There are numerous researches to analyze the propensity of the self employment between immigrants and Canadians.

Some studies, reported that demographic characteristics are associate with the choice of self employment. Li (2001) underlined the important role of socio-demographic factors to choose being self-employment with the help of the 1980 to 1995 Canadian longitudinal immigration data base. The results are as follows. Some socio-demographic factors, such as level of education, year since immigration and marital status, which display an effect on their choice, should be take into account .what is more, the choice of self employment related to duration of landing. It means more human capital with well-educated or older age are more willing to opt for self employment. Moreover, compare to female immigrants, male are more inclined to own their business. Also among the immigrants groups difference, he found that individuals from western economic, such as Europe and United States, are more likely to be self employment. Since employed Longitudinal Immigration Data Base, which only provide information on immigrants , the paper does not compare the choice between native born and the immigrants based on the demographic characteristics.

With 2001 Canadian ethnic diversity survey, Nakhaie, R., Lin, X., & Guan, J. (2009) pointed out that the social capital (such as “associations participation”, “trust”, “religious participation”) help to explain the self employment decision of different minority groups. In order to show the effect of this variable, they use four separately models to show the variation to other variables. They found that social capital does not provide more business opportunities for the whole minority groups individuals, only for those with strong social capital networks in the labour market. Furthermore, their finding also showed that demographics characteristics plays an essential role on immigrants’ choice. Compared to Europe, Canadians and British, the visible minorities have lowest self employment rate(13.4%), and age and gender have an impact on their choice. They also pointed out that the immigrants form China or Filipino are more likely start their business in the lower skills “distribution sector” such as the trade, retail or other services, which can account for the lower economic return for those immigrants, while the Canadian or Europeans are more likely to enter in the agriculture and the higher skills self employment. Therefore, social capital can benefit those with better social network more business opportunities .

Fairlie, R. W., Zissimopoulos, J., & Krashinsky, H. (2010). use the cross section data of the three developed countries-United States, Canada and United Kingdom -among three immigrants groups (Chinese, Indian and other Asian) and present the evident that self employment have more common in immigrants than the native born. For the part of Canada ,they concluded that education have the positive and significant effect on the individual to their business performance. Among the Asian immigrants groups, the rates of self employment in Philippino, Indian and Vietnamese are lower than domestic born.

Besides the demographic and human capital characteristics, in term of self employment, there are two main theory to explain the immigrant may be more likely to self employment .

One explanation is the ethnic enclaves effect. Using 1970 and 1980 US Census data, Borjas (1986) found that older cohorts the higher probability of being self employed which shows the positive assimilation effect. Also ethnic enclaves (due to the language or cultural background share in the similar community) is one of explanation for the immigrant have higher self employment rate than the natives.

In contrast to Borjas study with U.S data, Ley, D. (2006) use the questionnaires with 90 businessmen from Hong Hong, Taiwan and Korea in Vancouver to figure out which factors account for the business success. He found that the well education and fluency in language do play an positive role on the success of enterprise. What is more, “country of origin” have impact on their success. Surprisingly, the Koreans are less take the advantage of their ethnic enclave in comparison with immigrants from Hong Kong and Taiwan, but they get the higher economic return. Regarding of location of business, unexpected is the higher return can gain form the other areas rather than Vancouver or Richmond. Therefore, he concluded that ethnic enclave economy have negative effect on business success.

Contrast to ethnic enclaves effect, Another explanation is block mobility thesis, which refers to a lack of job opportunity for the immigrants, so they have to start their own business to survive in the labour market. Based on 1991 Canadian census, Li provided evident on the different of the earning of self employment and wage employment among five groups, concluded that compared to the domestic-born, the immigrant of visible minority or non visible immigrant are more participate into self employment. And the economic return in the wage sector is lower than the self employment. And the visible status of immigrants also accounts for the the different earning in self employment He also suggested that the combination of the higher return and the blocked mobility effect, lead the immigrant choose being self employment. (Li,1997 )

The self employment performance of female has been examined in the form of interview in Alberta. Hughes, K. D. (2003) reported that Two-thirds of interviewers are aged over 45, many of them with a high level of education. About 17.5% and 12.7% women reported lacking of job opportunities and “job loss” are significant factors that push them into self employment during that time.

Hou and Wang (2011) combined the several Canadian censuses, labour force survey data and survey of self-employment to give us the overview of immigrants self employment situation in Canada recent year and explain the inducement of self employment.The Characteristics of self-employed among Canadian born and immigrants also be analyzed. The younger, non-married or without child are less probability to be self employment. The proportion of immigrants with the Post-secondary education over than the Canadian born both in the paid or self-employment sector.And male have higher propensity on self-employment than woman.what is more, in order to exam the push or pull effect behind the self employment, they employed Canadian Survey of Self-Employment and found that the share of immigrants entry in to self employment “by choice” is only 50%, less than the domestic born (60%). This finding can explain by a lack of job option in the labour market that immigrants are force into self employment involuntarily, while for those, who enter into self employment voluntarily, are more attracted by the enterprise advantages.

Also besides the odds of being self employment, there are some researches focus on the return of self employed between the native and immigrants. Frenette, M. (2004). employed 1981, 1986, 1991, and 1996 census data of Canada, showing that the population of immigrant start their business grow faster than the native, however compare the economic return of self employment between immigrant and native born , the earning of immigrant are less than the native born.

Business environment also relative to self employment and immigrants. Razin, E., & Langlois, A. (1996), employed 1991 Canadian census data, focus on the immigrant ethnic groups performance among 25 metropolitan areas in Canada. The points out that the geographic also affect their decision among different ethnic groups. Surprisingly, they found that non-mainstream immigrants cohort prefer “peripheral metropolitan area” to start their business, which with limit business opportunity and less competition, than larger metropolitan areas. Since this study only interested in self employment rate of immigrants groups in different Central metropolitan areas, not mention other human capitals impact on their choice.

Using 1961,1971,1981 and 1991 Canadian data base, Mata, F., & Pendakur, R. (1999) discussed immigrants business choice associate with the level of education. They found that the immigrant male with lower education has higher odds of self employment than native born with same level. The industry choice also relative to the level of education. Individual with lower education may going to provide lower skill work ,such as consumer services. While Individuals with university certificate are more likely to serve in the business sector. In addition, they found that immigrants who own the university certificate are less odds of start their business than the Canadian born. Since this paper more focus on the immigrants’ industry choice, there is no comparison between different immigrants groups.

Kuhn, P. J., & Schuetze, H. J. (2001). , pooled data from 1982 to 1998 of Canadian Surveys of Consumer Finances to give us the dynamics trends of Canadian born performance in labour market. The main finding is that due to unbalance job position in the Canadian labour market and the decreasing job opportunity during the periods, a larger fraction of men from waged worker pushed into self employment, as well as the increasing rate of female enter into self employment sector, both effect cause the increasing of self employment during that period.

There are numerous researches talk about self employment outcome n Canada. This paper will show the how the different factors, combing basic human capital with geography variables, contribute to the decision to be the self employed. What is more, some researchers has paid attention to the male performance in the labour market, others are do the research on immigrants groups only. Therefore, this study will go further to discuss the self employment performance between Canadian born and immigrants groups based on gender and country of origin.

Reference:

Borjas, G. J. (1986). The self-employment experience of immigrants. Chicago

Frenette, M. (2004). Do the Falling Earnings of Immigrants Apply to Self‐employed Immigrants?.Labour,18(2), 207-232.

Fairlie, R. W., Zissimopoulos, J., & Krashinsky, H. (2010), The international Asian business success story? A comparison of Chinese, Indian and other Asian businesses in the United States, Canada and United Kingdom. In International differences in entrepreneurship(pp. 179-208). University of Chicago Press.

Hou, F., & Wang, S. (2011). Immigrants in self-employment. Statistics Canada.

Hughes, K. D. (2003). Pushed or pulled? Women's entry into self‐employment and small business ownership.Gender, Work & Organization,10(4), 433-454.

Kuhn, P. J., & Schuetze, H. J. (2001). Self‐employment dynamics and self‐employment trends: a study of Canadian men and women, 1982–1998.Canadian Journal of Economics/Revue canadienne d'économique,34(3), 760-784.

LaRochelle-Côté, S. (2010).Self-employment in the downturn. Statistics Canada.

Ley, D. (2006). Explaining variations in business performance among immigrant entrepreneurs in Canada.Journal of Ethnic and Migration Studies,32(5), 743-764.

Li, P. S. (1997). Self-employment among visible minority immigrants, white immigrants, and native-born persons in secondary and tertiary industries of Canada. Canadian Journal of Regional Science, 20(1), 103-118.

Li, P. S. (2001). Immigrants' Propensity to Self‐Employment: Evidence from Canada.International Migration Review,35(4), 1106-1128.

Mata, F., & Pendakur, R. (1999). Immigration, labor force integration and the pursuit of self-employment.International Migration Review, 378-402.

Nakhaie, R., Lin, X., & Guan, J. (2009). Social capital and the myth of minority self-employment: Evidence from Canada.Journal of ethnic and migration studies,35(4), 625-644.


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