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The predicted earnings differential and immigrant self-employment in Sweden

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This paper investigates the influence of the predicted earnings differential between self-employment and wage-employment on self-employment propensities among immigrants in Sweden. Immigrants from non-European countries have essentially lower earnings from self-employment and wage-employment than immigrants from European countries. It is found that the difference between an immigrant's predicted earnings in self- and wage-employment has a strong influence on an immigrant's self-employment decision. A one unit increase in the log differential between self-employment and wage-employment earnings increase the self-employment rate among immigrants by about 5 percentage points, suggesting that discriminatory wages in the wage-employment sector may push immigrants towards self-employment.

Document Type: Research Article


Affiliations: Centre for Labour Market Policy Research, Växjö University, SE–351 95 Växjö, Sweden

Publication date: 2006-04-10

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