Do the falling earnings of immigrants
apply to self-employed immigrants?
by Marc Frenette
Business and Labour
Market Analysis Division
Analytical Studies Branch research paper series, No.
195
It is well known that labour market outcomes of immigrants have been
declining over the last two decades. The vast majority of studies focus on outcomes
in paid employment. During much of the 1990s there was little full-time job creation,
and both immigrants and the native born increasingly turned to self-employment.
This study investigates the change in labour market outcomes for immigrants who
entered self-employment, using census data.
In paid jobs, recent immigrants
earned about 16% less than Canadian-born workers in 1980. By 1990, a similar point
in the economic cycle, this gap had grown to about 28%. Between 1985 and 1995
(two similar points in the economic cycle), the earnings gap between recent immigrants
and Canadian-born workers in paid jobs increased from 27% to 38% . This comparison
is between all employed recent immigrants and all employed native born, but the
story holds when controlling for differences in age, education, visible minority
status, family type and geography.
As the earnings of recent immigrants
in paid jobs were declining, more and more recent immigrants were turning to self-employment.
In 1981, about 8% of recent immigrant workers were self-employed. By 1996, this
proportion had almost doubled to 14%.
In self-employed jobs, the earnings
gap between recent immigrants and Canadian-born workers rose during the 1980s
(from 13% in 1980 to 20% in 1990), but showed little change between 1985 and 1995,
holding steady at 27% to 28%. Hence, relative to the native-born, self-employed
immigrants fared somewhat better during the 90s than their paid-employed counterparts.
However, in absolute terms, earnings fell throughout the period for recent immigrants
who were both self-employed and paid workers. In that sense, the story was very
similar for both groups.
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