Notes

^1.

The Business Immigration Program (BIP) initially included two components: the "Entrepreneurs" and "Self-employed" streams. In 1986, a third stream-"Investors"-was added. In the 1990s, over one-half of business immigrants were admitted as entrepreneurs and self-employed (Schuetze 2010). By the late 2000s, however, most business immigrants were entering as investors (CIC 2010).

^2.

In the Census questionnaire, individuals are asked first whether they are: (1) working for wages, salary, tips, or commission; (2) working without pay in a family farm or business; (3) self-employed without paid help; (4) self-employed with paid help. If they are self-employed, individuals are further asked whether their farm or business has been incorporated. In 2006, 41% of all self-employed men and 27% of all self-employed women in non-farming industries reported having their own incorporated business.

^3.

The share of individuals with negative self-employment earnings among all self-employed workers was about 3% in 1981 and 6% in 2006. To check the sensitivity of the study's results to the exclusion of these least successful individuals, all subsequent analyses are replicated without the exclusion. The results support the conclusions drawn from the sample excluding individuals with negative self-employment income. Tables are available upon request.

^4.

These adult immigrants could have arrived at any age. The same is also applicable to the potential parents of the second generation.

^5.

For this reason, individuals aged 25 to 44 from the 2006 Census are included for the purpose of comparing young adults in the same age range but 25 years apart, although strictly those who were aged 0 to 18 in the 1981 Census should be at the 25-to-43 age range in the 2006 Census. The addition of individuals aged 44 from the 2006 Census would increase slightly the unadjusted self-employment rate of the 2006 sample, since age is positively associated with the likelihood of self-employment. However, these individuals' inclusion has little effect on the adjusted self-employment rate, since age is controlled in the multivariate analysis. Alternatively, it would be possible to restrict the sample from the 1981 Census to age 25-to-43. Both approaches produce similar adjusted self-employment rates.

^6.

The self-employment rate estimated from the census tends to be lower than the self-employment rate estimated from the LFS. In the census, self-employed workers who have no work during the reference week and who do not report working any hours or being absent from work would be classified as "unemployed" or "not in the labour force." The same self-employed workers may be coded as "employed" if they attributed their absence to not having any work during the reference week. Some persons who are considered as paid workers in the census are considered as self-employed persons in the LFS, including those who work at jobs such as babysitting, cleaning for private households, or delivering newspapers.

^7.

For example, among Canadian-born male workers aged 20 to 64, the share of individuals who were aged 45 to 64 increased from 28% to 40% between 1981 and 2006.

^8.

Educational levels comprise six categories: no high school certificate or diploma; high school certificate or diploma; non-university certificate or diploma; bachelor degree; graduate degree; and degree in medicine, dentistry, veterinary medicine, or optometry. Years of potential experience are estimated as "age minus years of schooling and 6." Marital status is coded as married (including common-law) vs. other. Mother tongue is coded as English/French=0, other=1. Housing tenure is coded as owners vs. renters. Ethnic/population groups are based on the combination of visible-minority status and ethnic ancestry variables. Visible-minority status is used to identify sub-groups within the visible-minority population, while ethnic ancestry is used to identify ethnic groups within the non-visible-minority population. The identified 15 groups are the following: Chinese, South Asian, Black, Filipino, Korean/Japanese, other visible minorities, British/French/Canadian, German, Italian, Ukrainian, Dutch, Polish, Jewish, Portuguese, other European origins. In the model, British/French/Canadian is used as the common reference group. The reason that British, French, and Canadian are combined is to maintain historical comparability. From the 1981 Census to the 2006 Census, the share of the population that reported its ethnic origin to be Canadian increased significantly. The majority of those reporting Canadian as their ethnic origin were those who reported themselves as British or French (Bonikowska and Hou 2010). Geographic regions are grouped into 13 categories: Montréal, Toronto, Vancouver, and the ten provinces (excluding these three largest metropolitan areas).

^9.

A companion paper examines whether the effects of these socio-demographic variables vary by generational status (Abada et al. 2011).

^10.

For both the self-employed and paid workers, earnings are the sum of net self-employment income and wages/salaries. In the census, the self-employed in incorporated businesses are instructed to report their employment income as wages/salaries.

^11.

It is well-known that any analysis of self-employment income should be interpreted with the utmost caution. On the one hand, a higher tendency of income underreporting among the self-employed would bias upwards any income disadvantages to self-employment relative to paid employment. On the basis of household expenditure patterns, Schuetze (2002b) estimated that the self-employed in Canada on average underreported their income by 11% to 23%, but observed that the degree of underreporting did not increase from the 1970s to 1990s. Dunbar and Fu (2008) showed that income underreporting is not confined to the self-employed, although the self-employed have a higher tendency to underreport income. On the other hand, employee fringe benefits (e.g., pension contributions and medical benefits) that are unavailable to the self-employed would exaggerate any relative income advantages to self-employment (Parker 2004). With census data, it is not possible to address with these potential biases. It is assumed such potential biases are constant over time, across skill levels (education and experience), and by generational group.

^12.

Preliminary analysis suggests that the trends in self-employment earnings of recent immigrants and of the Canadian-born are likely affected by different factors. The industrial mix among the self-employed changed significantly for both groups between 1981 and 2001. For instance, for Canadian-born self-employed men, the industrial structure became less concentrated, and there was a large shift from primary industry to business services. The top three sectors in 1981 were primary (31%), trade (19%), and construction (15%). In 2006, the top three sectors were business services (22%), construction (20%), and primary (13%). Among recent immigrants, the top three industrial sectors were trade (23%), other services (19%), and construction (14%) in 1981, and business services (21%), transportation and communication (18%), and trade (16%) in 2006. However, shifts in industrial mix accounted for little of the changes in the gap of self-employment earnings between recent immigrants and the Canadian-born. Recent immigrants experienced a much larger decline in earnings within major industrial sectors. Among Canadian-born men, self-employment earnings rose among those in incorporated businesses and unincorporated businesses with paid help, but declined among those in unincorporated businesses without paid help. In contrast, self-employment earnings declined among recent immigrant men in all these types of self-employment.

^13.

In Statistics Canada's census products as well as in the System of National Accounts, individuals self-employed in their incorporated business are considered paid workers; in the LFS, self-employed workers include working owners of incorporated business and unincorporated businesses, other self-employed, and unpaid family workers (Baldwin and Chowhan 2003; Statistics Canada 2010).

^14.

In the 2006 Census, among the self-employed workers defined by the class-of-work variable, 55% had the majority of their employment earnings in the year prior to the census from net self-employment income. The main reason for this is that self-employed workers in incorporated businesses were instructed to report their employment earnings as wages/salaries. Among self-employed workers in unincorporated businesses, 72% had the majority of their employment earnings from net self-employment income.