Native-immigrant Earnings Differentials for Employees and Self-Employed

Sammanfattning: Abstract  This study investigates the native-immigrant earnings differential in self-employment and wage employment in Sweden. The main research question is whether the earnings differential between immigrants and natives differs when immigrants are self-employed. Thereafter, we want to be able to find a critical conclusion in which we can explain the increase or decrease in the different earning groups. Sweden is one of the multinational countries in Europe with a rapidly growing immigrant population. The question that was studied in this essay is analyzed in many ways by economists and researchers. Many previous research discuss the immigrant’s employment propensities and whether immigrants earn more or less in self-employment compared to wage-employment in the labor market.  Theories such as human capital, discrimination and many more, not only explain immigrants’ earnings in the labor market but even discuss the reasons. In our essay we focus on immigrants' earnings relative to natives’. We collected integrated data from the European Social Survey (ESS) between years 2002 - 2018. In the study, we applied the ordinary least squares (OLS) method and conducted immigrants as a dummy variable. Our results suggest that immigrants earn 1.2% lower in self-employment and 9.3% lower in wage-employment relative to natives. Although immigrants earn less than natives in both sectors.  This difference is smaller when immigrants are self-employed. Our results can be supported theoretically that immigrants might be exposed to discrimination in a lower degree in self-employment than wage-employment. Additionally, immigrants might choose to be self-employed to avoid lower earnings in wage employment