Executive summary
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Self-employment is often considered to be an important aspect of the economic integration of immigrants. Some immigrants engage in self-employment in order to overcome limited employment opportunities and low returns to their foreign-acquired skills, while others enter self-employment as a means to implement their business ideas, gain flexibility, and seek higher earnings. Most studies of immigration and self-employment have focused on first-generation immigrants—that is, individuals born abroad. Consequently, little is known about the pathways to self-employment among the children of immigrants or about the role that self-employment plays in their labour market outcomes. It is worthwhile addressing this issue for the purpose of better understanding the role that self-employment plays in the long-term economic integration of immigrants and that of their children.
This paper examines the levels of self-employment among immigrants and the children of immigrants, including both the second generation (Canadian-born children of immigrant parents) and the 1.5 generation (foreign-born children of immigrant parents). The differences between Canadian-born parents and their children (the third-and-higher generations) are also examined, with a view to providing a benchmark of broader trends in self-employment over time. The analysis focuses on three questions: (1) Are children of immigrants likelier or less likely than immigrant parents to be self-employed?; (2) Are children of immigrants likelier or less likely than children of Canadian-born parents to be self-employed?; (3) Is the generational change in the self-employment rate from immigrant parents to the children of immigrants different from the generational change from Canadian-born parents to their children?
The analysis uses data from the 20% sample master files of the 1981 and 2006 Canadian censuses of population. It is not possible to directly match children with their actual parents by using multi-year census data; consequently, a generation cohort method of analysis is employed. A generational linkage is made by matching a synthetic cohort of parents, identified in the 1981 Census on the basis of their age, immigration status, and presence/age of children, with a synthetic cohort of their adult children identified in the 2006 Census on the basis of their age, immigration status, and the immigration status of their parents. Self-employed workers are defined as individuals who identify themselves as mainly self-employed in their own unincorporated or incorporated business.
The results show that second-generation men had a lower self-employment rate in 2006 than immigrant fathers had in 1981. However, when controls for demographic factors were applied, the self-employment rate was found to be about the same for these two groups. Compared with immigrant fathers at the same age, second-generation men had fewer years of work experience, a lower marriage rate, and fewer children; these factors accounted for second-generation men's lower unadjusted self-employment rate.
This intergenerational change in the self-employment rate and the associated demographic factors are not unique to the second generation: they are shared by third-and-higher-generation men. When changes in socio-demographic factors were taken into account, the generational succession in self-employment rates from immigrant parents to the second generation was about the same as that from Canadian-born parents to the third-and-higher generations.
The second-generation men had a higher self-employment rate than the third-and-higher-generation men. This is consistent with the higher self-employment rate observed among fathers of the second generation than among fathers of the third-and-higher generations. It thus appears that the group difference in the self-employment rate was passed on to sons.
The 1.5 generation men had a higher self-employment rate than that of immigrant fathers. They were also found to have a higher self-employment rate than those of the second-generation men and of the third-and-higher-generation men when group differences in socio-demographic characteristics were taken into account.
Young women in 2006, regardless of generational status, had higher self-employment rates than immigrant mothers did 25 years previously. This broad increase is consistent with the general trends in women's educational attainment, labour force participation, diversification in occupational structures, and earnings over recent decades. The increase in self-employment from mothers to daughters was slightly smaller among the second generation than among the 1.5 generation and the third-and-higher generations.
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