Economic returns of immigrants' self-employment

Research on ethnic business and immigrant entrepreneurship has posed two major questions. First, why are some immigrant groups more inclined toward entrepreneurship and self-employment? Second, are those immigrants who engage in business better remunerated than salaried workers? These questions produce conflicting answers. On the one hand, blocked mobility in the open market is believed to be a key factor in driving immigrants to business and self-employment; on the other hand, research on immigrant enclaves suggests that immigrants are drawn into the enclave economy because of its comparable returns. Using the Longitudinal Immigration Data Base, this paper shows that returns of self-employment were lower than employment for immigrants who entered Canada between 1980-1995, and that the income gap between these groups increased over time. Nevertheless, an increasingly larger proportion of immigrants engaged in self-employment over time. These findings support the notion that new immigrants probably choose self-employment to overcome employment obstacles.