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Why Do Self-Employed Immigrants in Denmark and Sweden Have Such Low Incomes?

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Author Info

  • Andersson Joona, Pernilla

    ()
    (SOFI, Stockholm University)

  • Wadensjö, Eskil

    ()
    (Stockholm University)

Abstract

When studying income differences and income distribution, the self-employed are often excluded from the population studied. There are several good reasons for this, for example that incomes from self-employment are not reported to the same extent as incomes from being an employee. On the other hand it is a problem to exclude the self-employed when studying income differences if the group is large, if the share that is self-employed differs between groups and if there is a difference in the average income from self-employment compared to the average wage income. This is the case when we study incomes for immigrants in Western Europe. The immigrants are overrepresented among the selfemployed, self-employed immigrants are in other sectors than self-employed natives, and the incomes from self-employment differ from the incomes of the wage earners. In this paper we look at the incomes for the self-employed in Denmark and Sweden. To minimize the problems with unreported income we will mainly compare the annual incomes of the selfemployed immigrants and their native counterparts. The measurement error should only create a bias in the estimate of the income difference between the groups if there is a systematic difference in how they report their incomes. Using two cross-sections, one for each country, we find large income differences between natives and immigrants in both countries. Regression estimates show that most characteristics have the same influence in the two countries but also some interesting differences. Using quantile regressions we find that the difference in annual incomes differs depending on where in the income distribution we look. We find that the difference is smaller higher up in the distribution.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1280.

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Length: 27 pages
Date of creation: Sep 2004
Date of revision:
Publication status: published in: Brussels Economic Review / Cahiers Economique de Bruxelles, 2006, 48 (1-2), 43-71
Handle: RePEc:iza:izadps:dp1280

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Related research

Keywords: income differences; self-employment; quantile regressions; immigrant workers;

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  1. Andersson Joona, Pernilla & Wadensjö, Eskil, 2004. "Self-Employed Immigrants in Denmark and Sweden: A Way to Economic Self-Reliance?," IZA Discussion Papers 1130, Institute for the Study of Labor (IZA).
  2. Andersson Joona, Pernilla & Wadensjö, Eskil, 2004. "Other Forms of Employment: Temporary Employment Agencies and Self-Employment," IZA Discussion Papers 1166, Institute for the Study of Labor (IZA).
  3. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
  4. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  5. David Brownstone & Robert Valletta, 2001. "The Bootstrap and Multiple Imputations: Harnessing Increased Computing Power for Improved Statistical Tests," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 129-141, Fall.
  6. Bruce Bradbury, 1996. "Are the Low Income Self-employed Poor?," Discussion Papers 0073, University of New South Wales, Social Policy Research Centre.
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